Dell Tells Big Holders Higher Bid Is in Works -- WSJ
November 07 2018 - 3:02AM
Dow Jones News
By Cara Lombardo and Dana Cimilluca
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 7, 2018).
Dell Technologies Inc. has been contacting large shareholders of
an affiliate about sweetening a roughly $22 billion bid to buy them
out before the unpopular deal goes to a vote next month.
In the past week, Dell representatives have approached a handful
of large holders of shares in Dell Technologies Inc. Class V, known
by its ticker DVMT, to discuss what they would need in a recut
deal, people familiar with the matter said.
Dell could decide as soon as this week whether to increase the
offer for DVMT shares, which track the personal-computer and
data-storage giant's controlling stake in cloud-computing company
VMware Inc. There is no guarantee Dell will end up improving the
terms, and it is unclear how much of a sweetener may be under
consideration.
A deal would mark Dell's return to the public markets and
simplify its complex structure. The company has previously ruled
out increasing the $109-a-share offer amid investor resistance and
has also explored the possibility of a straight initial public
offering instead.
The proposed buyout, spearheaded by founder Michael Dell and
investment firm Silver Lake, faces intense opposition from several
large shareholders, including activist investor Carl Icahn, who
owns a roughly 8.3% stake. He is urging others to vote against the
deal and last week sued Dell, accusing it of withholding
information.
The company has said Mr. Icahn's allegations are unfounded.
The mounting opposition appears to have brought Dell to the
realization that if it doesn't sweeten the takeover bid, the deal
is doomed to fail.
The current offer, made in July, would allow DVMT holders to
exchange each share for 1.3665 shares of what would become a newly
public Dell, or $109 in cash. DVMT shares closed Tuesday at
$92.10.
Mr. Icahn has said he believes DVMT is worth approximately $144
a share, while P. Schoenfeld Asset Management LP, which owns a much
smaller DVMT stake, said in a letter made public last month that
the consideration should be increased by 20%. Mr. Icahn has also
said he could make a competing partial bid to buy DVMT shares,
should some holders want to cash out at a lower price than he feels
is fair.
The Wall Street Journal has previously reported that other
holders, together owning a big chunk of DVMT shares, were
considering rejecting Dell's offer. They include Elliott Management
Corp., some teams at BlackRock Inc., Dodge & Cox, Farallon
Capital Management LLC and Canyon Capital Advisors LLC.
A vote on the deal is scheduled for Dec. 11.
Write to Cara Lombardo at cara.lombardo@wsj.com and Dana
Cimilluca at dana.cimilluca@wsj.com
(END) Dow Jones Newswires
November 07, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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