* Vote set for July 18
* Proxy advisory firm Egan-Jones also backs Dell's bid
(Adds Icahn statement)
July 8 The largest U.S. shareholder advisory
firm recommended on Monday that Dell Inc stockholders
vote in favor of Chief Executive Michael Dell's $24.4 billion
buyout offer, increasing the odds of his prevailing against
billionaire investor Carl Icahn's rival bid.
Dell shareholders are scheduled to vote on the offer July
18. Several large investors have been pushing for improved
"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."
Institutional Shareholder Services Inc is the biggest
shareholder advisory firm, and its recommendations can sway
investors looking for direction.
ISS on Monday said Michael Dell's offer "transfers the risk
of the deteriorating PC business and the company's ongoing
business transformation to the buyout group."
It said shareholders cannot immediately accept Icahn's bid
even if they vote down Michael Dell's proposed buyout.
Another proxy advisory firm Egan-Jones also put out a report
on Monday supporting Michael Dell
Billionaire Carl Icahn and Southeastern Asset Management
have made a rival bid that would see shareholders tender 1.1
billion shares at $14 each. But for the bid to be put to a vote,
shareholders first must reject Michael Dell's proposal and then
elect a new slate of directors put up by Icahn.
"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 said they disagree with the ISS
recommendation and would vote against Michael Dell's buyout
offer. The two partners reiterated that they believe the offer
price of $13.65 undervalues the company.
"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.
Michael Dell has said the company's shift from a computer
maker to a provider of enterprise computing services is best
done away from public scrutiny.
Michael Dell, whose offer is backed by equity financing
from buyout firm Silver Lake, does not plan to raise the $13.65
per share bid, people familiar with the matter said last week.
Dell is investing aggressively in research and sales to
retain customers as it looks to grab market share from
established players such as International Business Machines Corp
and Hewlett-Packard Co.
Dell's profit for the fiscal first quarter ended in April
dropped 79 percent from a year earlier, and revenue fell 2
The CEO owns 15.7 percent of the company he started in 1984
out of his college dorm room with $1,000. Under his take-private
deal, Michael Dell and his investment firm would own 75.9
percent of the company, with Silver Lake owning the rest.
Dell has said Michael Dell's and Silver Lake's post-buyout
plan anticipated adding a significant number of sales personnel
and boosting spending on research and development. And the
restructuring plan envisioned would not be palatable to
shareholders if carried out as a public company.
Dell shares were up 3 percent to $13.42 in Nasdaq trading on
(Reporting by Poornima Gupta in San Francisco; Sruthi
Ramakrishnan in Bangalore; Editing by Saumyadeb Chakrabarty,
John Wallace and Leslie Gevirtz)