New York – On Friday it appeared that a last minute attempt by Michael S. Dell (Dell Inc. – NASDAQ:DELL) to buy back the company that bears his name might finally be in place. According to sources, the two sides in the negotiations have agreed to a revised agreement after a special board committee rejected the previous agreement on Wednesday.
Under the terms of the deal, Mr. Dell and Silver Lake Partners will pay $ 13.75 a share plus a special dividend of 13 cents per share; shareholders will also receive a dividend scheduled for the third quarter worth 8 cents a share. Mr. Dell is reportedly financing the special dividend himself by taking a discount on the 16 percent stake that he is contributing towards the buyout – marking his shares down to $ 12.50 from $ 13.36.
Given this arrangement, the special committee has agreed to change the rules by no longer counting Dell shares not cast in a special election as ‘no’ votes, this would include absentee votes and Mr. Dell’s votes as he is not allowed to vote his shares. Based on this agreement, the vote has been postponed until September 12, and the record date, the day by which investors must have held Dell shares to vote, was pushed back to August 13 from June 3 in the hopes of allowing a number of investors who support the deal to vote.
The new deal has taken months to come together and has faced many challenges, including one from activist Carl C. Icahn who opposed the deal. According to the New York Times, a number of prominent investors leery of the original buyout bid, including the mutual fund manager Franklin Mutual Advisers and the hedge fund Pentwater Capital, indicated on Friday that they would support the new offer.
In a statement, Alex Mandl, Chairman of the Special Committee, said ‘The committee is pleased to have negotiated this transaction, which provides as much as $470 million of increased value, including the next quarterly dividend that will now be paid regardless of when the transaction closes.’
Whilst a deal appears to be in place, it remains to be seen if it is a good deal for the long-term future of the company as it is unclear how Dell’s aggressiveness in getting the deal done will affect the company’s cash position going forward. Furthermore, opponents of the deal, most notably Mr. Icahn and his supporters are likely to use the next week to gather as many shares as they can in the hopes of voting against the deal in September.
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