Institutional Shareholder Services Inc, the biggest shareholder advisory firm, recommended that Dell Inc stockholders vote in favor of Chief Executive Michael Dell’s $24.4 billion buyout, increasing the odds of his prevailing against billionaire investor Carl Icahn’s rival bid.
The shareholders of Dell are scheduled to vote on the offer on July 18. “The ISS seal of approval makes the Silver Lake/Michael Dell deal more likely to receive shareholder approval,” Brian White, analyst at Topeka Capital Markets said, adding that ISS views Icahn’s bid “as coming with too much uncertainty.”
ISS recently said the offer of Michael Dell “transfers the risk of the deteriorating PC business and the company’s ongoing business transformation to the buyout group.” The advisory firm added that shareholders cannot immediately accept Icahn’s bid even if they vote down Michael Dell’s proposed buyout.
Shareholders first must reject Michael Dell’s proposal and then elect a new slate of directors put up by Icahn for the bid to be put to a vote.
“They must also vote to replace the entire board and the CEO through a proxy contest at a subsequent annual meeting, and even then may end up with cash and equity if the envisioned self tender is oversubscribed,” ISS said.
Icahn and Southeastern disagree with the ISS recommendation and would vote against Michael Dell’s buyout offer. “Based on numerous conversations with our fellow Dell stockholders, we are confident that many of Dell’s significant owners share our view,” they said in a statement.
Dell’s profit for the fiscal first quarter ended in April dropped 79 percent from a year earlier, and revenue fell 2 percent. Dell shares were up 3 percent to $13.42 in Nasdaq trading on July 8.