Michael Dell Gets Backing of ISS in $24.4 Billion Bid to Buy Company
The influential ISS is recommending that shareholders vote for the CEO’s proposal to buy Dell and take it private.Michael Dell’s $24.4 billion bid to buy his namesake company and take it private received a significant boost July 8 when the influential Institutional Shareholders Service recommended that investors vote for the proposal over a competing one from Carl Icahn. The ISS’ recommendation was somewhat surprising, given the reports last week that indicated the proxy service was leaning against the offer from Michael Dell and private equity firm Silver Lake Partners. The special committee appointed by the Dell board of directors to oversee the company’s future was so concerned that it reportedly had recommended to Michael Dell that he increase his $13.65-per-share offer, a suggestion that he and Silver Lake officials reportedly rejected. The ISS could have some influence over investors who see the organization as an unbiased player in the contentious issue. Its recommendation comes 10 days before shareholders are scheduled to vote on Michael Dell’s offer, which has the backing of the board’s special committee but has been criticized by some larger investors as undervaluing the company. The ISS pointed to the 25.5 percent premium shareholders would earn by accepting Michael Dell’s offer, and that by buying the company and taking it private, the CEO and Silver Lake would be taking on the risks associated with a company that is desperately trying to reduce its reliance on a deteriorating PC market and remake itself as an enterprise IT solutions and services provider.
The proxy organization also suggested that the counterproposal put forward by activist investor Carl Icahn and Southeastern Asset Management (SAM)—to buy up to 1.1 billion shares for $14 a piece and vote in a new board of directors, all while keeping the company public—would be a more risky and complicated process.