Proxy firm backs Michael Dell's buyout offer

NEW YORK (AP) — Dell shares jumped 2.9% Monday after a top proxy

advisory firm recommended the PC maker's shareholders approve a

founder-led deal to take the company private.



Founder Michael Dell and Silver Lake Partners investing firm are

offering to buy Round Rock, Tex.-based Dell for $13.65 per share, or a

total of $24.4 billion.



In a report out over the weekend, Institutional Shareholder Services,

a corporate governance advisory firm, pointed to the offer's hefty

premium, a 26% premium to the share price when the offer was made, and

the benefits that come with an all-cash financed bid.



Michael Dell is trying to buy the company he founded at a "bargain

price," Carl Icahn, billionaire investor and Dell's second-largest

shareholder said late Sunday.



Icahn reiterated the benefits of his counter offer that would keep

about 40% of the company's shares publicly traded. He is offering $14

a share to buy about $16 billion worth of Dell stock and would finance

the deal by significantly adding to Dell's debt load.



The plan of Icahn and Southeastern Asset Management to buy back up to

1.1 billion Dell shares at $14 each would be funded with $5.2 billion

in debt, $7.5 billion in Dell's cash on hand and $2.9 billion from the

sale of Dell receivables. Icahn has said he and his affiliates have $5

billion in existing equity and proposed debt financing to help fund

their proposal.



Michael Dell says he can turn his beleaguered company around by taking

it private and diversifying into niches, such as business software,

data storage and consulting. The company's board backs Michael Dell's

proposal and has expressed concerns about Icahn's financing.



Shareholders are scheduled to vote on the buyout offer at the

company's annual meeting on July 18. The ISS report said that if

shareholders reject the Dell offer, they should be willing to hold

Dell shares, which may get hit as the company continues to transform

itself amid the deteriorating PC industry.



A special committee of Dell's board evaluating the company's options

said in a statement that it was pleased with the recommendation,

noting that it believes not going forward with the sale would expose

the company and its shareholders to "serious risks" that would further

reduce the company's value.

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