Dell Special Committee Receives Two Alternative Acquisition Proposals in “Go-Shop” Process

Mon Mar 25, 2013 7:00am EDT

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ROUND ROCK, Texas--(Business Wire)--
The Special Committee of the Board of Dell Inc. (NASDAQ: DELL) today announced
that the "go-shop" period provided for in the merger agreement between the
company and entities owned by Michael Dell, Dell`s Founder, Chairman and Chief
Executive Officer, and investment funds affiliated with Silver Lake Partners,
has elicited two alternative acquisition proposals. One proposal was submitted
by a group affiliated with a private equity fund managed by Blackstone and the
other by entities affiliated with Carl Icahn. Both proposals are attached. 

The Special Committee, consisting of four independent and disinterested
directors, has determined, after consultation with its independent financial and
legal advisors, that both proposals could reasonably be expected to result in
superior proposals, as defined under the terms of the existing merger agreement.
Therefore, each of the Blackstone and Icahn groups is an "excluded party" and
the Special Committee intends to continue negotiations with both. 

The Special Committee also noted that Michael Dell has confirmed to the
Committee his willingness to explore in good faith the possibility of working
with third parties regarding alternative acquisition proposals. 

Alex Mandl, Chairman of the Special Committee, said, "We are gratified by the
success of our go-shop process that has yielded two alternative proposals with
the potential to create additional value for Dell shareholders. We intend to
work diligently with all three potential acquirers to ensure the best possible
outcome for Dell shareholders, whichever transaction that may be." 

Pursuant to the existing merger agreement, subject to certain requirements, the
Special Committee has the right to terminate the agreement in order to accept a
superior proposal. The Special Committee has not determined that either the
Blackstone proposal or the Icahn proposal in fact constitutes a superior
proposal under the existing merger agreement and neither is at this stage
sufficiently detailed or definitive for such a determination to be appropriate.
There can be no assurance that either proposal will ultimately lead to a
superior proposal. While negotiations continue, the Special Committee has not
changed its recommendation with respect to, and continues to support, the
company's pending sale to entities controlled by Michael Dell and Silver Lake
Partners. 

Prior to entering into the existing merger agreement, the Special Committee
undertook a rigorous process, over a period of more than five months, to
evaluate Dell`s risks, opportunities, and strategic alternatives. These
alternatives included continuing with or modifying the company`s existing
business plan, implementing a leveraged recapitalization, changing the dividend
policy, and potentially selling all or parts of the business. 

As a result of that process, the Special Committee unanimously determined that
the sale of the company at a premium would be the best alternative for
stockholders, and negotiated aggressively to ensure that stockholders receive
the highest possible value, including securing provisions for a robust "go-shop"
process. The result was that a number of strategic and financial parties entered
into confidentiality agreements with the company and Blackstone and Icahn
submitted proposals. 

The price of $13.65 per share in cash to be paid pursuant to the existing merger
agreement provides value certainty at a 37% premium to the average price for the
90 days before rumors of the transaction surfaced. The Committee noted that the
Silver Lake Partners raised its bid six times by a total of approximately $4
billion, or over 20%, during the course of negotiations. 

Subject to applicable laws and regulations, the Special Committee undertakes no
obligation, to provide updates or make further statements regarding the
proposals received from Blackstone or Icahn, any revised proposals that may be
received from either of them or the status of discussions with either of them,
unless and until a definitive agreement is reached or such discussions are
terminated. 

The alternative acquisition proposals received from Blackstone and Icahn follow
here: 

BLACKSTONE PROPOSAL

Boulder Acquisition Corp. 

c/o Blackstone Management Partners L.L.C. 

March 22, 2013 

STRICTLY PRIVATE AND CONFIDENTIAL

 Special Committee of the Board of Directors of Dell Inc.                  
 One Dell Way                                                              
 Round Rock, Texas 78682                                                   
 Attention: Alex Mandl, Presiding Director                                 
                                                                           
 Re: Acquisition Proposal and Request for Designation as "Excluded Party"  
                                                                           
                                                                           


Dear Mr. Mandl: 

On behalf of Boulder Acquisition Corp. ("AcquisitionCo"), Blackstone Management
Associates VI L.L.C. (in its capacity as general partner of Blackstone Capital
Partners VI L.P.), Francisco Partners III, LP, Insight Venture Management, LLC
and each of their respective affiliates, affiliated funds and limited partners
(all such persons and entities, together with AcquisitionCo, being collectively
referred to herein as the "Investor Group"), we hereby submit this Acquisition
Proposal and request prompt designation of the Investor Group as an Excluded
Party, as such terms are defined in the Agreement and Plan of Merger by and
among Dell Inc., a Delaware corporation ("Dell"), and the Parent Parties (as
defined therein) dated as of February 5, 2013 (the "Merger Agreement"). 

Thank you for allowing us the access to management and data that we needed to
complete a preliminary review of the Dell business. We believe there is
significant upside in the Dell businesses, we see significant upside in the
value of Dell`s shares, and our proposed transaction structure (described below)
will deliver significantly greater value to your shareholders than the value
agreed to in the Merger Agreement. 

As a result, we would like to proceed in the process to acquire Dell and hereby
submit, in accordance with the terms of the Merger Agreement, this Acquisition
Proposal. Subject to confirmatory due diligence and negotiation of a mutually
agreeable merger agreement (which we expect to include substantially similar
terms and conditions as the Merger Agreement, other than certain changes to
mechanical provisions required to implement the structure of our Acquisition
Proposal as described below), we are prepared to enter into a definitive
agreement to acquire Dell in a leveraged recapitalization transaction where
shareholders could choose to receive either all cash or stock (subject to a
cap), in each case valued in excess of $14.25 per share, representing a Superior
Proposal to the $13.65 cash purchase price agreed to in the Merger Agreement. 

We are prepared to invest the time and resources necessary to complete a
transaction along an expedited timeline, and we would contemplate providing
drafts of a definitive transaction agreement (which will include financing
commitment letters), along with our more detailed proposal as soon as possible
following the completion of satisfactory due diligence. 

KEY FEATURES OF OUR PROPOSAL

Our Acquisition Proposal contemplates a leveraged recapitalization transaction
with the following features:

* Shareholders who wish to receive cash will have the opportunity to receive
greater than $14.25 in cash per share for all of their shares. 
* Shareholders who wish to participate in the ongoing upside of the company will
have the opportunity to remain as shareholders and receive shares (subject to a
cap) valued in excess of $14.25, which shares would continue to be publicly
traded on the Nasdaq.

Our proposed transaction would have several important benefits for Dell
shareholders:

* Higher price per share for shareholders electing to receive cash 
* Shareholder friendly structure, with the ability to choose cash or stock 
* Leveraged upside for shareholders who elect to remain as shareholders

FINANCING

We intend to fund the transaction using a combination of equity and debt
financing, in addition to Company cash and cash equivalents. We plan to invest
equity amounts in excess of those new equity amounts contemplated by the Merger
Agreement to facilitate the proposed transaction. 

Based on discussions with equity co-investors, certain strategic partners, and
debt financing sources, we are highly confident that financing can be arranged,
which will include comparable debt sources and structures as the existing deal.
We are currently working with Morgan Stanley & Co LLC ("Morgan Stanley") as our
lead debt financing source to prepare financing, and have had discussions with
other debt financing sources that have indicated a strong interest to finance
our Acquisition Proposal. We have received from Morgan Stanley a "highly
confident" letter related to our ability to raise the required debt financing
for this transaction. Upon designation of the Investor Group as an Excluded
Party we expect to finalize discussions with other financing sources on an
expedited basis. Additionally, at the time of execution of definitive agreements
with respect to our proposal, we expect to provide binding financing commitments
from debt and equity financing sources in the form customary for a transaction
of this type. 

We have held discussions with some of Dell`s largest shareholders, and we
anticipate inviting them, certain of Dell`s other shareholders and certain other
strategic and financial partners to participate in the transaction as part of
our group. We would also expect to encourage (but would not require) the MD
Investors (as defined in the Merger Agreement) to participate in our transaction
by rolling over equity held by the MD Investors. 

TIMING

We have significant experience structuring and consummating transactions of this
nature, and we believe we can complete our due diligence review and negotiate
the terms and conditions of a Superior Proposal (as defined in the Merger
Agreement) quickly during the next phase of the process. Given our due diligence
to date, we anticipate that the remaining due diligence would focus on key
business, accounting, legal and regulatory matters and could be completed
quickly, assuming full cooperation of Dell and its advisors. As part of this
process, we would expect to have full access to the senior management team of
Dell, certain other key employees, Dell`s independent accountants and Dell`s
records, financial and operating data and material agreements (including the
schedules attached to the Merger Agreement). 

We are committed to continuing to pursue a transaction on the terms herein,
which we believe will provide a more compelling value proposition to Dell and
its shareholders than currently provided under the Merger Agreement. We believe
that this proposal meets all applicable requirements under the Merger Agreement
to enable the Special Committee to determine that the Investor Group is an
Excluded Party in accordance with the Merger Agreement. Due to the considerable
time commitment and uncertainty of outcome, we will continue our due diligence
and work toward providing a definitive proposal, only upon receipt of written
confirmation from the Special Committee of the Board of Directors that the
Investor Group has been determined to be an Excluded Party in accordance with
the Merger Agreement. 

GENERAL

The proposal contained in this letter constitutes an indication of our interest
in pursuing a transaction and does not constitute a binding offer, agreement or
agreement to proceed with the transaction or to otherwise make a binding offer
or agreement at any point in the future. 

This indication of interest is submitted by us for review and consideration by
the Special Committee of the Board of Directors of Dell on a confidential basis,
and the existence of our discussions and this letter (other than such disclosure
obligations outlined in the Merger Agreement) shall be kept strictly
confidential in accordance with the terms of that certain letter agreement by
and between Blackstone Management Partners L.L.C. and Dell, dated February 22,
2013. 

This letter shall be governed by and construed in accordance with the laws of
the State of Delaware without regard to the conflicts of law principles thereof.


This proposal will expire at 5:00pm (NY time) on March 28 if you fail to provide
the written confirmation discussed above prior to such time. 

Please do not hesitate to contact any of the team members listed below with any
questions. 

Sincerely Yours, 

BOULDER ACQUISITION CORP. 

By: /S/
Name: Chinh E. Chu
President

                                                       
 Blackstone Management Partners L.L.C.                 
                                                       
 Chinh E. Chu                David Johnson             
 Senior Managing Director    Senior Managing Director  
                                                       
                                                       
 Morgan Stanley & Co. LLC                              
                                                       
 Robert A. Kindler                                     
 Vice Chairman                                         
                                                       
                                                       
 Kirkland & Ellis LLP                                  
                                                       
 David Fox                   Daniel Wolf               
 Partner                     Partner                   
                                                       
                                                       
 cc: Evercore Group L.L.C                              
                                                       
                                                       


ICAHN PROPOSAL

Carl C. Icahn
Icahn Enterprises LP
767 Fifth Avenue
Suite 4700
New York, New York 10153
March 22, 2013 

Special Committee of the Board of Directors of Dell Inc. 

Dell Inc.
One Dell Way
Round Rock, Texas 78682 

James B. Lee, Vice Chairman
JPMorgan Chase
270 Park Avenue
New York, New York 10017 

William O. Hiltz
Naveen Nataraj
Evercore Partners
55 East 52nd Street
New York, New York 10055 

Jeffrey J. Rosen
Michael A. Diz
Debevoise & Plimpton
919 Third Avenue
New York, NY 10022 

Re: Acquisition Proposal for Dell Inc. ("Dell")

Dear Members of the Special Committee of the Board of Directors of Dell and
Advisors: 

On February 5, 2013, Dell entered into a merger agreement (the "February 5
Merger Agreement") with certain entities affiliated with Silver Lake Partners
and Michael S. Dell. Capitalized terms not otherwise defined in this letter
shall have the meanings ascribed to such terms in the February 5 Merger
Agreement. Section 5.3 of the February 5 Merger Agreement provides, among other
things, that Dell, its Subsidiaries and its Representatives have the right to
initiate, solicit, encourage and receive Acquisition Proposals with respect to
Dell up to the No-Shop Period Start Date. This Acquisition Proposal, which is
detailed below, is being delivered, as contemplated by the February 5 Merger
Agreement, by Icahn Enterprises LP, and Carl C. Icahn, prior to the No-Shop
Period Start Date. 

Icahn Enterprises LP

We believe that you will agree that Icahn Enterprises is well able to provide
the $1 billion cash equity capital (in addition to its existing $1 billion stock
position in Dell), and that Mr. Icahn and his affiliates other than Icahn
Enterprises are well able to provide the additional $3 billion cash equity
capital, contemplated in this Acquisition Proposal, which constitutes an
aggregate $5 billion equity commitment. In this regard we invite you to examine
the public filings of Icahn Enterprises and to meet with us regarding any
additional questions you may have. Further, we have excellent relationship with
numerous large banking institutions and we are confident that we would be able
to obtain the debt financing contemplated in our proposal. Although we are well
known for the performance of our investment activities, over time we have found
that our greatest returns have come from the control and ownership of portfolio
companies. For example, in May 2012, Icahn Enterprises purchased a controlling
interest in CVR Energy, Inc. (``CVR``) for an aggregate purchase price
approximately $2 billion. As of March 11, 2013, based on the closing sale price
of CVR stock and distributions since Icahn Enterprises acquired control, we had
a gain of over $2 billion on our purchase of CVR. 

Currently, the portfolio companies owned or controlled by Icahn Enterprises and
Mr. Icahn include among others, the following:

                                                                                 
                                                                                 
 Name                                  Holdings      Date of Initial Investment  
 CVR Energy, Inc.                      82%           2011                        
 Tropicana Entertainment Inc.          67%           2008                        
 West Point Home                       100%          2004                        
 Federal Mogul Corporation             78%           2001                        
 Viskase Companies Inc.                70%           2001                        
 XO Holdings                           100%          2001                        
 PSC Metals                            100%          1998                        
 American Railcar Industries Inc.      55%           1994                        
 ACF Industries                        100%          1984                        
                                                                                 


The Acquisition Proposal For Dell

As you know, on March 10, 2013 Icahn Enterprises entered into a confidentiality
agreement with Dell and commenced due diligence in support of an Acquisition
Proposal. On March 13, 2013, Jefferies LLC ("Jefferies"), as a representative of
Icahn Enterprises, entered into a confidentiality agreement with Dell and
commenced due diligence in support of an Acquisition Proposal. Further, on and
after February 8, 2013, Southeastern Asset Management Inc. ("Southeastern") has
publicly disclosed its desire to remain a shareholder of Dell, rather than
participate in the merger contemplated by the February 5 Merger Agreement and
has suggested that the merger be recast as a transaction under which Dell
shareholders are provided with the opportunity to elect to continue to hold Dell
shares or receive cash, at their option. T. Rowe Price has similarly opposed the
February 5 Merger Agreement. For purposes of this proposal, Icahn Enterprises
assumes that Southeastern and T. Rowe Price and other larger holders would, if
provided the opportunity, support the proposal set forth below and agree to the
matters set forth in the fourth bullet item of the proposal set forth below. 

We hereby propose that we and Dell engage in the following merger transaction
(the "Proposed Merger", and the surviving company of the Proposed Merger, the
"Surviving Company"):

* Dell will obtain transaction funding composed of the following:

* $2.0 billion investment ($1 billion by Icahn Enterprises and $1 billion by
Carl C. Icahn and his affiliates other than Icahn Enterprises) for the purchase
of common shares of the Surviving Company (in addition to the shares currently
owned by Icahn Enterprises and its affiliates) at a price of $15 per share,
resulting in an additional 133 million shares being issued by the Surviving
Company. As contemplated in the fifth bullet item below, Mr. Icahn and his
affiliates other than Icahn Enterprises, are willing to commit an additional $2
billion of cash equity financing, for an aggregate $5 billion total equity
commitment to this Acquisition Proposal. 
* $7.4 billion of cash currently available at Dell. 
* $1.712 billion in new factoring receivable facility (total factoring
receivable facility of $3.0 billion). 
* $5.218 billion in new debt. 
* We understand that this Proposed Merger contemplates less total leverage on
the Surviving Company than under the February 5 Merger Agreement.

* In connection with the Proposed Merger, Dell shareholders will be entitled to
elect to receive either: (x) shares of the Surviving Company on a one-to-one
basis with their current holdings; or (y) an aggregate of up to $15.65 billion
in cash (the "Payment Funding") payable at a rate of $15 per share. If the
Payment Funding is fully utilized this would result in 1.043 billion shares
(58.1% of the current outstanding) being subject to the Proposed Merger. If
shareholders electing to receive cash exceed the maximum number of shares that
may be acquired with the Payment Funding, then such elections will be accepted
on a pro rated basis. If electing shareholders are insufficient to utilize all
of the Payment Funding, then the balance will be distributed to all of the
remaining shareholders of the Surviving Company as a special dividend (the
"Special Dividend"). 
* In addition to the Payment Funding, Icahn Enterprises anticipates that Dell
would be required to pay the breakup fee under the February 5 Merger Agreement
of $180 million, and that Dell would incur other deal fees and expenses in the
Proposed Merger of approximately $500 million, for a maximum aggregate use of
funds of approximately $16.33 billion. 
* Neither Icahn Enterprises (which together with its affiliates, currently owns
approximately 80 million shares of Dell), Southeastern (which publicly reports
ownership of approximately 146.5 million shares of Dell), T. Rowe Price (which
publicly reports ownership of approximately 82 million shares of Dell), nor
other large holders that so agree (collectively with Icahn Enterprise,
Southeastern, and T. Rowe Price, the "Rollover Holders"), would be eligible to
elect to receive cash or shares in the Proposed Merger, but rather their
existing common stock position in Dell would rollover into the Surviving
Company. Rollover Holders would receive the Special Dividend, if any. 
* Pursuant to the Proposed Merger, if all eligible existing Dell shareholders
elect to receive cash, then approximately 58.1% of the currently outstanding
Dell shares would be subject to the Proposed Merger and following the completion
of the Proposed Merger, Icahn Enterprises and its affiliates would own 24.1% of
the outstanding shares of the Surviving Company; Southeastern and its affiliates
would own 16.6% of the outstanding shares of the Surviving Company; T. Rowe
Price and its affiliates would own 9.3% of the Surviving Company and the
remaining public shareholders would own 50% of the shares of the Surviving
Company. The opportunity exists to increase the number of shares cashed out by
non-Rollover Holders in the Proposed Merger, if the large holders agree with
Icahn Enterprises to become Rollover Holders. Further, Mr. Icahn and his
affiliates other than Icahn Enterprises would be willing to commit (in addition
to the equity investment provided for in the first bullet item above) an
additional $2 billion of equity capital in cash, in the event that Southeastern,
T. Rowe Price or other existing large Dell shareholders do not agree to become
Rollover Holders. 
* Closing is anticipated to occur in July 2013.

This proposal contemplates the negotiation, execution and delivery of a
definitive agreement (the "Definitive Agreement") containing the terms and
conditions set forth herein, together with covenants, representations,
warranties and indemnification provisions which are satisfactory to both parties
(including, if so requested, limits on the election of merger consideration) and
which are typical and standard in a transaction of this nature. 

This letter is a non-binding proposal. Neither Icahn Enterprises, Mr. Icahn,
their respective affiliates, officers or directors or representatives, have, nor
will this proposal letter or any discussions or communications among the
parties, create or constitute, any offer, obligation, contract, commitment or
duty of any kind or character, to engage in, negotiate or enter into or complete
a transaction. Only a Definitive Agreement executed and delivered by the parties
thereto, shall be binding upon the parties. 

We look forward to proceeding with negotiations as promptly as possible and are
prepared, together with Jefferies, to commit the resources to develop a
Definitive Agreement with you. In addition, we look forward to receiving your
confirmation that the Special Committee has concluded that our proposal is or
could reasonably be expected to result in, a Superior Proposal. 

Very truly yours, 

/S/
Carl C. Icahn



Icahn Enterprises LP 

By: Icahn Enterprises GP Inc., its general partner 

By: Carl C. Icahn, Chairman of the Board 

Forward-looking Statements

Any statements in these materials about prospective performance and plans for
the Company, the expected timing of the completion of the proposed merger and
the ability to complete the proposed merger, and other statements containing the
words "estimates," "believes," "anticipates," "plans," "expects," "will," and
similar expressions, other than historical facts, constitute forward-looking
statements within the meaning of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Factors or risks that could cause our
actual results to differ materially from the results we anticipate include, but
are not limited to: (1) the occurrence of any event, change or other
circumstances that could give rise to the termination of the merger agreement;
(2) the inability to complete the proposed merger due to the failure to obtain
stockholder approval for the proposed merger or the failure to satisfy other
conditions to completion of the proposed merger, including that a governmental
entity may prohibit, delay or refuse to grant approval for the consummation of
the transaction; (3) the failure to obtain the necessary financing arrangements
set forth in the debt and equity commitment letters delivered pursuant to the
merger agreement; (4) risks related to disruption of management`s attention from
the Company`s ongoing business operations due to the transaction; and (5) the
effect of the announcement of the proposed merger on the Company`s relationships
with its customers, operating results and business generally. 

Actual results may differ materially from those indicated by such
forward-looking statements. In addition, the forward-looking statements included
in the materials represent our views as of the date hereof. We anticipate that
subsequent events and developments will cause our views to change. However,
while we may elect to update these forward-looking statements at some point in
the future, we specifically disclaim any obligation to do so. These
forward-looking statements should not be relied upon as representing our views
as of any date subsequent to the date hereof. Additional factors that may cause
results to differ materially from those described in the forward-looking
statements are set forth in the Company`s Annual Report on Form 10-K for the
fiscal year ended February 1, 2013, which was filed with the SEC on March 12,
2013, under the heading "Item 1A-Risk Factors," and in subsequent reports on
Forms 10-Q and 8-K filed with the SEC by the Company. 

Additional Information and Where to Find It

In connection with the proposed merger transaction, the Company will file with
the SEC and furnish to the Company`s stockholders a proxy statement and other
relevant documents. Stockholders are urged to read the proxy statement when it
becomes available and any other documents to be filed with the SEC in connection
with the proposed merger or incorporated by reference in the proxy statement
because they will contain important information about the proposed merger. 

Investors will be able to obtain a free copy of documents filed with the SEC at
the SEC`s website at http://www.sec.gov. In addition, investors may obtain a
free copy of the Company`s filings with the SEC from the Company`s website at
http://content.dell.com/us/en/corp/investor-financial-reporting.aspx or by
directing a request to: Dell Inc. One Dell Way, Round Rock, Texas 78682, Attn:
Investor Relations, (512) 728-7800, investor_relations@dell.com. 

The Company and its directors, executive officers and certain other members of
management and employees of the Company may be deemed "participants" in the
solicitation of proxies from stockholders of the Company in favor of the
proposed merger. Information regarding the persons who may, under the rules of
the SEC, be considered participants in the solicitation of the stockholders of
the Company in connection with the proposed merger, and their direct or indirect
interests, by security holdings or otherwise, which may be different from those
of the Company`s stockholders generally, will be set forth in the proxy
statement and the other relevant documents to be filed with the SEC. You can
find information about the Company`s executive officers and directors in its
Annual Report on Form 10-K for the fiscal year ended February 1, 2013 and in its
definitive proxy statement filed with the SEC on Schedule 14A on May 24, 2012.

Contacts for the Special Committee:
George Sard/Jim Barron/Matt Benson
Sard Verbinnen & Co
(212) 687-8080 

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