The founder and CEO of Dell Inc (NASDAQ:DELL) and Silver Lake Management LLC do not intend to improve their USD24.4bn (EUR19bn) bid for the PC maker, insiders told Bloomberg.
Michael Dell and the private equity firm agreed in February to buy out and delist the business at USD13.65 a share. They believe their original offer represents a fair and substantial premium to the presumable trading value of the company’s shares in the event the bid is rejected by stockholders at their meeting on 18 July, the sources said.
Another insider previously told the news agency that proxy advisory firm Institutional Shareholder Services (ISS) may make a negative recommendation on the CEO’s bid.
Meanwhile, Carl Icahn is hoping that other stockholders reject the going-private transaction so he could proceed with his own rival proposal, including a plan to repurchase about 1.1bn company shares at USD14.00 apiece. The activist investor said earlier he had obtained USD5.2bn in debt funding for the purpose.
A person familiar with the founder’s thinking told Bloomberg that Dell had calculated his stake will grow to some 41% from the current 15.6% if Icahn succeeds with his own proposal, while the latter will see his 8.7% interest rise to about 22%. Such development would allow Dell to begin a proxy fight to regain control of his company, the source added.
Earlier, the special committee of the PC maker’s board said in a regulatory filing that Icahn’s tender offer implies unrealistic multiples as it values Dell at 12 times EBITDA, while its closest peer, Hewlett-Packard Co (NYSE:HPQ), or HP, trades at 4.6 times EBITDA.