Michael Dell, the founder of computer company Dell Inc., has won the support of the company’s biggest shareholder—ISS, in his attempts to close a deal to take the company private. This is major shot in the arm for Dell, who just 24 hours ago seemed to be on the ropes from closing a deal. The title of this story could of very well have been: ‘Get Your Money Up: Dell Unable To Raise Enough funds For Deal.’ But Dell has turned the tables, which is a blow to Carl Icahn who is a major investor opposing Michael Dell’s deal in favor of his own execution plan. As reported by Bloomberg.com:
” Michael Dell won support from Institutional Shareholder Services Inc. for the $24.4 billion buyout of his company, a surprise endorsement from an influential shareholder adviser that increases the chances he will prevail. Dell and Silver Lake Management LLC’s buyout plan would shelter shareholders from risks tied to the deteriorating personal-computer business, ISS said today. As recently as last week, ISS was leaning against recommending Dell’s offer, people familiar with the matter said at the time. Glass, Lewis & Co., another shareholder adviser, also backed the buyout proposal.
Backing from ISS provides more ammunition to Michael Dell, who wasn’t planning to sweeten the bid, as he seeks support ahead of a shareholder vote set for July 18. Dell is fending off a challenge from billionaire investor Carl Icahn, who said last week that he obtained $5.2 billion in debt financing to support his third and latest effort to derail the CEO’s proposed buyout. Today the special committee reiterated its support for the founder’s offer.”
It’s always interesting to watch the chess moves of billionaires as they strategize when billions of dollars are at stake. Of course the issue with Dell Inc. is that no matter whether their founder wins this battle or Icahn takes the cake, it will still be a struggling company in need of innovation in this post-pc era. Relying on enterprise customers is not a good enough business model for the future, just ask Blackberry how that’s working for them. But for now Michael Dell has scored one for his camp, which should be favorable for the shareholders vote of the buyout which will take place July 18th. Dell believes if he gets his way he can lead the company into a new era.
