Founder told to sweeten offer for Dell as Icahn ups the stakes

Wed Jul 3, 2013 8:05am EDT
 
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By Soyoung Kim, Michelle Sierra and Leela Parker

NEW YORK (Reuters) - Michael Dell has been advised to raise his $24.4 billion offer for Dell Inc, coming under further pressure as billionaire investor Carl Icahn revealed he had committed more than $3 billion to back an alternative proposal.

The PC maker's special committee told Dell's founder and chief executive a few days ago that he should raise his offer if he wants it to succeed, a person familiar with the matter said on Tuesday.

The special committee, which was formed to independently assess what the best option for Dell shareholders is, came to that conclusion based on its meetings with investors as well as concerns over a key upcoming recommendation by investment advisory firm ISS, the person said.

ISS is expected to publish its view on whether Michael Dell's offer, which is backed by equity financing from buyout firm Silver Lake, is in the interest of Dell's shareholders as early as next week. A July 18 shareholder vote on Dell's take-private plan will follow.

Despite being advised by the special committee that he should raise his offer to see the transaction through, Michael Dell was non-committal, the person added, confirming an earlier report by Bloomberg News.

Dell Inc and Silver Lake declined to comment.

The special committee's move came as Icahn and his affiliates disclosed on Tuesday they had provided $3.42 billion, or 66 percent, of the debt financing to back his bid for Dell.

Investment bank Jefferies & Co provided $1.6 billion, or 30 percent of the overall $5.2 billion in committed financing with the remainder of about $179 million coming from 14 institutional funds, including pension funds and insurance companies, according to a U.S. Securities and Exchange Commission filing.   Continued...

 
A Dell laptop computer is pictured in New York in this August 26, 2008 file photograph. REUTERS/Brendan McDermid/Files