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Dell’s Destiny to Be Decided July 18

The board wants to accept Michael Dell’s $24.4 billion buy-out offer and go private

In what may prove a dangerous thing to do, Dell has turned its back on activist investor Carl Icahn and other large stockholders hoping to cash out at a higher return.

The board wants to accept Michael Dell's $24.4 billion buy-out offer and go private. And that's what it's telling stockholders ahead of a vote now set for Thursday, July 18.

It says it approached over 70 potential strategic buyers and financial buyers and the Michael Dell-Silver Lake offer is the "best alternative available - in a challenging business environment."

Michael Dell can't vote his 15.6% position and needs a majority of the rest of the shares to take his $13.65-a-share offer at a 25% premium over Dell's price on January 11, when Bloomberg broke the news that the company was in talks to go private.

The stock, which is being held up by the deal, could of course plunge if it doesn't materialize.

Icahn and other naysayers like Southeastern Asset Management Inc., a big shareholder that would lose money on the deal, are expected to launch a campaign to get the proposition routed.

The Wall Street Journal quotes an analyst who said. "The swing vote could be the mutual funds, index funds and exchange-traded funds who usually go by a third-party opinion."

Icahn wants to keep the company public and proposes to raid Dell's treasury and take on $5.2 billion in debt to pay its long-suffering stockholders off at the rate of $12 a share in cash or stock and at the same time let them keep their public positions on the theory that the company can really be turned around and pay off big-time.

Icahn and Southeastern together own close to 13% of Dell and Icahn said he would fire Michael Dell if his side wins the day figuring new blood can push Dell into the cloud computing business faster despite the massive debt his plan would saddle the company with.

In an open letter Southeastern said it and Icahn Enterprises LP believe "that substantially greater value can be realized for Dell stockholders than what is reflected in the Dell management-led buyout proposal and will be making a proxy statement available in the near future."

Dell's board says this strategy is very risky, a risk that would be shifted to what is calls the buying group should the CEO's offer prevail. It's thought Michael needs 60% of shareholders outside of Icahn and Southeastern to vote for him.

The special committee of Dell's board charged with deciding if there's a superior offer for the company is still waiting for more information from Icahn who is contemplating a proxy fight if the committee doesn't go his way.

Blackstone Group, the big private equity house, took a look recently and says it doesn't want to touch Dell. The PC market is too dicey.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at) or paperboy(at), and by phone at 516 759-7025. Twitter: @MaureenOGara

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