Michael Dell has been given a welcome shot of support from the vendor's board as it sends a letter to shareholders, urging them to back his bid.
A Reuters article revealed that the letter said the sale to Michael Dell and Silver Lake bid is the "best alternative available".
"A sale to the Michael Dell/Silver Lake group... is the best alternative available — in a challenging business environment it offers certainty and a very material premium over pre-announcement trading prices," it read.
However, the shareholders are scheduled to vote on the Dell/Silver Lake offer at a special meeting on 18 July, as rival bids from investor Carl Icahn and Southeastern Asset Management, and Blackstone Group are still on the table.
The Blackstone bid – which would allow shareholders to receive either cash or stock – values Dell at $14.25 (£9.40) a share, above the $13.65 offered by Michael Dell and Silver Lake. Dell would remain listed on the NASDAQ if the proposed deal goes through. The leveraged recapitalisation deal will be funded by a mixture of equity and debt financing, as well as company cash and cash equivalents.
Icahn's offer – for just under three fifths of the company – will include a $1bn investment from Icahn Enterprises and a further $1bn from Icahn himself. The deal will also lean on $7.4bn of cash already available at Dell, $5.2bn in new debt and a $1.7bn-worth in new factoring receivable facilities. Shareholders will be allowed to maintain their current holdings or cash in their chips for $15 a share.
Speculation is also rife that the two bidders were considering teaming up.
But the Dell board's letter did not mention the two rival bids. In a separate letter, Southeastern Asset Management asked shareholders not to take any action until they had received its proxy statement.
It said: "We, along with Icahn Enterprises, believe that substantially greater value can be realised for Dell stockholders than what is reflected in the management buyout proposal."
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