Michael Dell closes in on prize with sweeter $25 billion deal

Fri Aug 2, 2013 1:33pm EDT
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By Greg Roumeliotis and Eileen O'Grady

NEW YORK/ROUND ROCK, Texas (Reuters) - Dell Inc and Chief Executive Michael Dell clinched a new $25 billion deal on Friday, boosting the bid and offering a special dividend in hopes of ending months of wrangling with opponents of the founder's proposed buyout of the world's No. 3 PC maker.

The new agreement includes a special dividend of 13 cents per share on top of a 10-cent increase in the sale price to $13.75 per share. In return, Michael Dell and his private equity partner Silver Lake convinced the company's special committee to agree to change the voting rules so that abstentions no longer count as opposing votes, a big boost for their camp.

Dell shares rose after the announcement. But activist investor Carl Icahn, who has amassed an 8.7 percent stake in Dell and has opposed the buyout offer as too low, vowed to keep fighting.

"We are pleased today to have won yet another battle, but the war regarding Dell is far from over," Icahn said in a Friday statement. "We are not satisfied. We believe that an increase of a mere 13 cents is an insult to shareholders."

Icahn has sued the tech company in a Delaware court, trying to block the changes to the voting rules.

Dell shares were up 5 percent at $13.61 in afternoon trading, a sign of increasing optimism that the deal will go through. But not everyone was convinced.

"We do not believe this battle is over yet, especially given yesterday's complaint filed by Carl Icahn," said Topeka Capital's Brian White.

The battle over Dell has raged for months, adding more uncertainty about a company already shrinking along with a rapidly declining PC market. Dell is trying to transform itself into an IBM-like enterprise computing firm.   Continued...

Shadows of Michael Dell, chairman of the board and chief executive officer of Dell, are cast under the company logo as he speaks during a press briefing in Tokyo March 24, 2009. REUTERS/Issei Kato