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Dell shares increase by 5.5 percent following buyout offer

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Dell shares have increased by 5.5 percent to $13.68 per share, following a buyout offer from founder of company, Michael Dell. 

Mr Dell is attempting to buy back the computer giant that he originally founded in 1984 while he was still in college.

He is trying to carry out the purchase along with investment from Silver Lake – a global leader in technology investing.

Mr. Dell and Silver Lake have offered to pay $13.75 a share in addition to a special dividend of 13 cents a share. The value of his shares is just over $12.50 each.

Originally, shareholders were going to vote on an offer from Mr. Dell on Friday. However, the addition of the dividend means that a new proposal has to be made to them. The committee is now set to vote on 12 September.

Mr Dell currently owns 16% of the company and wants to reorganize its focus. Dell has been drifting away from developing computers.

However, many shareholders are resisting his efforts. In particular Carl Icahn, who holds a 8.7% stake in the company and just started a legal challenge against Mr Dell’s attempt to buy the company back along with Ichan’s ally, Southeastern Asset Management.

Southeastern Asset Management said in a statement:

“Stockholders should ask why the special committee is acting as though its mandate is to get this deal done at any cost necessary when the transaction is so stockholder-unfriendly that it could not receive the required stockholder approval on three occasions.”

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.”

Mandl continued:

“We believe modifying the voting standard is in the best interests of Dell shareholders, both because it has enabled us to secure substantial additional value and because it provides a level playing field for the decision facing shareholders. The original voting standard was set at a time when the decision before the shareholders was between a going-private transaction and a continuation of the status quo. Since then, the nature of the choice facing shareholders has changed because of the emergence of an alternative proposal by certain stockholders. In the context of the current decision, the Committee does not believe it is appropriate to count shares that have not been voted as having been voted in support of any particular alternative. Accordingly, we have changed the voting standard to require that the going-private transaction receive the approval of a majority of the disinterested shares that are actually voted. By resetting the record date and providing abundant notice of the new meeting we are ensuring that all disinterested shareholders, including those who have acquired their shares since June 3, have ample opportunity to vote for or against the transaction. We urge all shareholders to support this transaction.”

Following the bid the company is valued at around $24.5 billion.