Dell Inc Chief Executive Michael Dell, aiming to clinch a $24.4 billion
deal to take the No. 3 PC maker private, agreed to value his 16 percent
stake in the company at about 2 percent below the price offered to other
shareholders, company filings on Thursday showed.
The founder, who
informed his board in August of his intention to remove the struggling
company from Wall Street's scrutiny, agreed after extensive negotiations
that his equity stake would be valued at $13.36 a share, versus the
$13.65 offered eventually.
Negotiations with Silver Lake kicked
off in October. Dell revealed that the private equity firm raised its
proposed offer price at least once during ensuing discussions.
facilitate a price increase by Silver Lake, Mr. Dell and related
persons agreed that their shares to be rolled over in the proposed
transaction would be valued only at $13.36 per share as opposed to the
$13.65 price offered to the company's unaffiliated stockholders," the
The proposed leveraged buyout, the largest
private-equity backed deal since the financial crisis, is being led by
Michael Dell and Silver Lake, and pits Dell's board against the
company's top independent investors.
Top two shareholders,
Southeastern Asset Management and T. Rowe Price, have been among the
most vocal opponents of the deal, which they say severely undervalues
the company, despite the challenges it faces in a shrinking PC market
and intense competition in enterprise software and services.
deal is up for a shareholder vote around June or July, the company said
in Thursday's filing. It will need a majority of shareholders, excluding
Michael Dell, to be approved.
Dell's board, which formed a
special review committee of independent directors after the CEO informed
them of his intentions, is now conducting a 45-day "go-shop" period,
actively soliciting higher bids.
Analysts do not expect rival bidders to step forward.
reports fiscal fourth-quarter results on Tuesday, when analysts get
their first chance to grill management on the buyout. But, in a
potential disappointment for Wall Street, Michael Dell himself will not
be present though he typically participates in post-earnings release
The CEO recused himself from the discussion, given his leading role in the buyout, a company spokesman said.
has lost 40 percent of its value since last year's peak, and is trying
to reinvent itself as a seller of higher-margin services to
corporations, an internal overhaul that would be conducted away from
public scrutiny if the buyout goes forward.
The PC maker, whose
profits fell 47 percent last quarter, is expected to report further
erosion of both revenue and income next week.
Dell's revenue in
the quarter is expected to slide almost 12 percent to $14.12 billion
from $16.03 billion a year earlier, according to an average forecast of
analysts polled by Thomson Reuters I/B/E/S.
The company, once the
world's top PC maker and a pioneer in computer supply chain management,
is struggling to defend its market share against Asian rivals like
It was hurt also by a slide in holiday-season sales of
personal computers for the first time in more than five years, despite
the launch of Microsoft Corp's Windows 8 operating system. Microsoft
itself is providing $2 billion in financing for Dell's buyout.
worldwide PC shipments fell nearly 21 percent to 9.48 million in the
last three months of 2012, from 11.97 million in the same period a year
Shares of Dell were steady at about $13.79 at midday.
© Thomson Reuters 2013