Silver Lake's Dell Deal Wins Surprise Endorsement From Major Proxy Firm

Jul 8 2013 | 10:44am ET

The private-equity-backed buyout of computer-maker Dell Inc. took a major step forward today when a crucial proxy-advisory firm gave its blessing to the deal.

Institutional Shareholder Services recommended that Dell shareholders approve the $24.4 billion buyout by company founder Michael Dell and p.e. firm Silver Lake Partners. The positive recommendation comes as something of a surprise to Dell and the buyers, which had been bracing themselves for a ISS to push a "no" vote.

In its report, ISS rejected claims from the deal's opponents, Carl Icahn and Southeastern Asset Management, that the $13.65 per share going-private transaction represents a giveaway of the company. The proxy service said the offer is a 25.5% premium over Dell's unaffected share price—and seemed to express skepticism that Dell could turn around its flagging fortunes one way or the other.

"The risk may be less that he's taking all the upside for himself than that he is trying to catch a falling knife," ISS wrote of Michael Dell. "From a public company shareholder's perspective, if your CEO is willing to buy your falling knife for the privilege of catching it, there is probably a price at which you should let him."

ISS noted that when the Blackstone Group, which had considered a competing bid for Dell, took a look at the company's books, it quickly walked away.

The special committee of Dell's board overseeing the sale had recently pushed Michael Dell to increase his offer for the company. But on Friday Dell and Silver Lake declined to do so.

Dell shareholders have until July 18 to vote on the deal.


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