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Michael Dell Writes a Letter to Dell Shareholders Telling Them He Is at Peace with Whatever They Decide

July 25, 2013 | About:

Canadian Value

123 followers
July 24, 2013 – Michael Dell today issued an open letter to the shareholders of Dell Inc. (DELL). The full text of the letter is as follows:

Dear Fellow Shareholders,

You have undoubtedly read many stories about our efforts to take Dell private. I wanted you to hear directly from me.

I believe that taking Dell private is the right thing to do for the company. We need to transform, and we need to do it quickly. The transformation is not without risks and challenges, and I believe that we can do what we need to do better as a private company than a public company.

When I came to the Dell board last August to ask if the board would consider the possibility of a going private transaction, I understood that the independent directors would control the process, and I made clear that I was ready to partner with whoever would pay the highest price. I encouraged every interested party to pay the highest price they could.

After one of the most thorough processes in history, the highest price that any of the parties was willing to pay was $13.65 per share. Although no other party has offered to pay more than $13.65 per share, Silver Lake and I have now increased our offer to $13.75 per share, an increase to public shareholders of approximately $150 million, which is our best and final offer.

I believe this offer is in the best interests of the company and our shareholders. Certain other parties have been proposing alternatives such as leveraged recapitalizations, sales of assets and other steps that I believe would be destructive to the company and that I do not and will not support.

The decision is now yours. I am at peace either way and I will honor your decision. Our agreement requires the vote of a majority of the unaffiliated shares – your shares – to approve the transaction. Unfortunately, our agreement also provides that shares that do not vote count as votes against the transaction. Currently, over 25% of the unaffiliated shares have not voted. This means that even if a majority of the unaffiliated shares that vote on the transaction want to accept our offer, the will of the majority may be defeated by the shares that do not vote. I think this is clearly unfair.

When we offered to increase our bid to $13.75 per share, we also asked the Special Committee of the Board to change this unfair vote standard and allow the will of the majority of the unaffiliated shares that vote on the transaction to control the outcome. Particularly given the efforts of others to promote alternative transactions, and the ability of those parties to vote their shares when my shares do not count, it makes no sense whatsoever to skew the playing field even further by counting shares not voting as if they supported the opposition group.

If the Special Committee agrees to our increased bid of $13.75 per share, and agrees to create a fair and level playing field in which you can decide, I will look forward to your decision.

Sincerely,

/s/ Michael S. Dell

About the author:

Canadian Value
http://valueinvestorcanada.blogspot.com/

Rating: 5.0/5 (2 votes)

Comments

stevenramsey
Stevenramsey - 1 year ago
Am I misreading this when he says, "The decision is now yours. I am at peace either way..." and the last sentence, where he says, "If the Special Committee..., then I will look forward to your decision."

Dell is looking extremely untrustworthy with that last attempt to get something done. It doesn't even matter if Icahn/Longleaf or if Chanos is right about the future of the business or what the outcome is? Michael Dell is acting pretty immature and maybe immoral.

On average, it has been a mistake to disagree with Icahn. If Icahn wants to do a leveraged recap of the company, Michael Dell should agree with it and hold onto/buy the stock. He would get a bigger cash payout ($14/share) on the stock and if Icahn is right, Dell just coattails the results of his company and Icahn's management. Michael Dell would grow his wealth, risk less of his own money upfront, and not have to work full-time to do it.

It's a "win, win, win situation", as Michael Scott would say it.
batbeer2
Batbeer2 premium member - 1 year ago
>> I believe this offer is in the best interests of the company and our shareholders.

And that is precisely where he is wrong. In his mind the company itself has an interest. He is explaining why this is a win-win. They have taken a course of action that balances out the interest of the company with th interests of shareholders.

There can be a long-term interest of shareholders that is at odds with short-term interests but there is no such thing as balancing out the interest of the company with that of its shareholders.

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