Michael Dell Sweetens Buyout Offer to Sway Shareholders

CEO Michael Dell shareholder vote dividend payment carl icahn computers PCs
Alexander F. Yuan/AP
ROUND ROCK, Texas -- A special committee of Dell's board has agreed to an increased offer from founder Michael Dell that would add a special dividend for shareholders.

The struggling computer maker said Friday that a group led by its founder and investment firm Silver Lake Partners will tack a one-time shareholder payout of 13 cents a share to an offer they made last week to buy the company for $13.75 a share. The new offer also guarantees that the company's third-quarter dividend of 8 cents a share will be paid at or before the closing.

Dell Inc. (DELL) stock jumped nearly 5 percent, or 64 cents, to $13.60 in Friday morning trading after the company's announcement.

Shareholders had been scheduled to vote Friday morning on a lower offer to buy the company for $13.65 a share. The meeting was called to order and quickly adjourned without a vote, which had already been postponed twice. Shareholders who own the stock as of Aug. 13 will now be eligible to vote at a Sept. 12 special meeting on the new deal.

The latest offer also includes a requirement that only shares voted either for or against the offer determine its outcome. The Dell special committee had rejected this condition earlier this week, before the special dividend payment was added. Under the previous offer, shareholders who didn't vote would be counted against the bid, making it more difficult for Michael Dell's group to get the votes needed in support.

Dell's offers have drawn criticism from major Dell investors such as Carl Icahn for being too low. Icahn and the investment firm Southeastern Asset Management have pitched a complex alternative offer to gain control of the company.

Icahn also sued Dell on Thursday to keep the PC maker from changing crucial details such as the record date of Michael Dell's previous offer.

The billionaire investor also contended that if the company is allowed to set a new record date for the meeting, it should hold a vote on the buyout at the same time as the annual meeting. Icahn wants to use the annual meeting to replace Dell's board and then oust Michael Dell, the chairman and CEO.

The investor said in a statement that he also wants a declaration that Dell's board breached its fiduciary duties to shareholders by, among other things, adjourning a July 24 special meeting without also scheduling the company's annual meeting. Icahn's complaint was filed in the Delaware Court of Chancery

Increase your money and finance knowledge from home

Income Investing

Grow your nest-egg.

View Course »

What is Short Selling?

Make a profit when stocks prices fall.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

Dell needs to give customers good deals to bring them back. Im typing on a near 7yr old dell inspiron 1721 w/vista. We also have a dell desk system that is 8yrs old w/XP. The laptop has gone through 4hds, a screen and a wireless card. Desktop not a single issue. All the issues have been repaired by dell. We are ready for a new system but not been able to get a good deal. I want a alienware she wants a basic system. Give us a deal great deal on both and you would have some repeat customers.

August 02 2013 at 10:01 PM Report abuse rate up rate down Reply