Take Silver Lake's money and run, Dell advises shareholders

Stockholders are better off taking Silver Lake's cash than holding on to their shares, the board wrote

Dell has written to shareholders they are better off accepting a bid from Michael Dell and Silver Lake to acquire the company than holding on to their shares.

The company's independent directors have unanimously agreed to recommend the transaction, it said Friday in a letter to stockholders.

"We are fully convinced that this significant, immediate and certain premium is superior to owning Dell as a stand-alone entity today -- with or without a leveraged recapitalization -- as well as to the other strategic and financial alternatives potentially available," the letter said. "We believe that the risks and uncertainty of a stand-alone public company are high, and that the transaction we have negotiated offers superior value for Dell stockholders."

The board solicited rival bids from 21 strategic and 52 financial buyers, but no superior offer materialized, it said.

The Silver Lake bid "shifts very substantial risks to the buying group -- risks that in any leveraged recapitalization would be retained by the stockholders and considerably magnified by leverage," the board said

That remark was aimed at rival bidders Carl Icahn and Southeastern Asset Management, who had proposed just such a leveraged recapitalization. The offer -- which never became a formal bid -- prompted Dell two weeks ago to issue a warning that Icahn's plan would leave the firm short of cash. In an open letter on May 13, the board's special committee asked Icahn for a draft of the definitive agreement concerning the proposed transaction, and for details of how he and Southeastern would finance it. The committee also asked who would run the company, and how Icahn could be sure sufficient stockholders would take payment in additional shares rather than cash.

In contrast, the Silver Lake bid of $13.65 per share represents a 25 percent premium over the price on the last trading day before news of the bid leaked, Friday's letter said.

The company has now filed final definitive proxy materials with the SEC ahead of a July 18 special shareholders' meeting to seek approval for the deal.

Peter Sayer covers open source software, European intellectual property legislation and general technology breaking news for IDG News Service. Send comments and news tips to Peter at peter_sayer@idg.com.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags business issuesDellMergers and acquisitions

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Peter Sayer

IDG News Service
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?