Dell says leveraged recap would be risky

Published March 29, 2013

| Reuters

Dell Inc said on Friday a leveraged recapitalization would be fraught with risks for the computer maker and would be unlikely to offer as much value as the $13.65-per-share buyout agreed with founder Michael Dell and the private equity firm Silver Lake Partners.

The analysis was part of a preliminary proxy statement published on Friday to inform Dell shareholders of how the $24.4 billion deal was put together, as well as what alternatives the company's board explored before it approved the deal.

Under the deal, Michael Dell and his investment firm will own 75.9 percent of Dell, with Silver Lake owning the rest.

Dell said the post-buyout plan anticipated adding a significant number of sales personnel and boosting spending on research and development spending. It has no plans to embark on major assets sales following the buyout, it added,

The restructuring plan envisioned by Michael Dell and Silver Lake, were it to be carried out with Dell as a public company, would not be palatable to shareholders and the stock could suffer, Dell said.

Dell also said a strategic party, whose identity it did not disclose, expressed interest on January 24 to acquire its financial services business for its book value, estimated at between $3.5 billion and $4.5 billion, excluding debt. A standalone deal of this kind would not benefit the company, Dell concluded.

Dell revealed that its special committee, chaired by Alex Mandl and set up to assess all possible strategic alternatives for the company, also comprises of board members Laura Conigliaro, Janet Clark and Kenneth Duberstein.

(Reporting by Greg Roumeliotis in New York and Poornima Gupta in San Francisco)

URL

http://www.foxbusiness.com/news/2013/03/29/dell-says-leveraged-recap-would-be-risky/