Business

Dell board backs Michael Dell's buyout offer

Michael Dell
Image caption Michael Dell wants to turn the firm around in private but its biggest shareholders are fiercely opposed

The board of Dell has recommended that shareholders should accept an offer led by founder Michael Dell to take the company private.

It called on shareholders to approve his $24.4bn (£16bn) buyout offer at a vote on 18 July.

The board said it was the "best alternative available".

Investor Carl Icahn and Southeastern Asset Management - who own a combined 12% of Dell - oppose the buyout and have made an alternative offer.

'Superior value'

Mr Dell and private equity group Silver Lake have offered $13.65 per share in cash to shareholders in return for taking the company private, which would see the company delisted from the stock exchange.

The offer price values Dell 37% higher in terms of market capitalisation than in January, before Mr Dell's buyout plan emerged.

Mr Dell has pledged to shift the business away from PCs into mobile devices and business software.

"A sale to the Michael Dell/Silver Lake group... is the best alternative available," the board wrote in an open letter to shareholders on Friday.

"In a challenging business environment it offers certainty and a very material premium over pre-announcement trading prices.

"Having conducted a thorough and probing review of Dell's challenges and opportunities, we believe that the risks and uncertainty of a standalone public company are high and that the transaction we have negotiated offers superior value for Dell stockholders."

Mr Icahn and Southeastern Asset Management have offered an alternative that would give Dell shareholders $12 per share in cash or additional shares. While this is a lower figure than Mr Dell's offer, it would allow investors to retain their stake in the company.

A committee of Dell board members evaluating this offer has said it needs more information.

Dell has seen its profits fall amid declining sales of personal computers as more consumers shift to smartphones and tablets.

The 18 July shareholders' meeting will take place at Dell's headquarters in Texas.

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