Dell Special Committee Requests Additional Information on Proposal From Carl
Icahn and Southeastern Asset Management
ROUND ROCK, Texas -- May 13, 2013
The Special Committee of the Board of Directors of Dell Inc. (NASDAQ: DELL)
today sent a letter to Carl Icahn and Southeastern Asset Management,
requesting additional information related to the proposed leveraged
recapitalization transaction submitted to the Special Committee on May 9,
2013, as part of the Special Committee’s thorough review of the proposed
The full text of the letter follows:
May 13, 2013
Mr. Carl C. Icahn
Icahn Enterprises L.P.
767 Fifth Avenue, 47th Floor
New York, NY 10153
Mr. G. Staley Cates
Southeastern Asset Management Inc.
6410 Poplar Avenue, Suite 900
Memphis, TN 38119
Dear Mr. Icahn and Mr. Cates:
We have received your letter dated May 9, 2013, addressed to the Board of
Directors of Dell Inc. (“Dell” or the “Company”), in which you outline a
potential transaction in which the Company’s stockholders would be entitled to
elect to receive either $12.00 per share in cash or $12.00 in additional
shares (based on a value your letter assumes to be $1.65 per share) for each
share currently held, in addition to retaining their current shares.
It is not clear to us whether you intend to formulate your transaction as an
actual acquisition proposal that the Board could evaluate and potentially
endorse or accept or rather to propose it as an alternative that the Board
could consider in the event the pending sale to Silver Lake and Michael Dell
is not approved. In order for the Special Committee of the Board of Directors
of Dell to evaluate the transaction you have proposed and potentially
negotiate terms which could cause it to constitute a Superior Proposal within
the meaning of the pending Merger Agreement, we would need certain
clarifications and additional materials, as set forth below.
1.Please provide a draft of the definitive agreement pursuant to which the
transaction would be effected. The Special Committee needs to understand
the full terms and structure of the transaction, the extent to which it
would be conditioned upon future events and actions, and the remedies that
would be available to the Company and its stockholders if the transaction
is not consummated.
2.Please provide comprehensive information regarding the proposed financing
for the transaction. We need to understand the terms of the debt
financing, and contingencies available if cash on hand or stockholder
rollovers are less than anticipated. We would also need to see drafts of
forms of commitment papers (and any proposed bridge facility) so that we
can assess the certainty of closing.
3.Please indicate the counterparty and terms of the proposed receivables
sale or financing and provide a draft of form of commitment letter or
purchase agreement applicable to this proposed sale or financing.
4.Please describe any contemplated arrangements to provide working capital
or other liquidity following the closing. Your proposal does not appear to
take into account the additional borrowings that would seem to be required
to address the liquidity needs that would result from the extent to which
you would use the Company’s cash in the transaction and the fact that you
would sell accounts receivable, which would have the effect of reducing
future cash flows. In addition to working capital, the Company is likely
to have other significant cash needs, such as approximately $1.7 billion
of debt maturities within approximately 12 months after closing.
5.Your proposal assumes that holders of at least 20% of Dell’s shares will
elect to receive distributions in the form of additional Dell shares.
Please provide the forms of commitment letters pursuant to which your
affiliated entities would commit to elect to receive additional shares. In
addition, please indicate whether you would obtain similar commitments
from holders representing an additional 8% of Dell’s shares (we note,
based on your Schedule 13D filings, that your affiliated entities have
investment discretion over approximately 12% of Dell’s outstanding
shares). If you would not obtain such commitments, please indicate as
noted above, the source of the additional cash needed to fund cash
distributions in respect of these shares.
6.Please provide your analysis as to whether the receipt of additional
shares by stockholders electing to receive share distributions will be
taxable to those stockholders.
7.Please identify the persons you would expect to form the senior management
team of Dell following the transaction, and what role these persons would
play in arranging the financing for the proposed transaction. Also, please
provide us with a description of the strategy and operating plan you would
expect this management team to implement. This information is important
both to our assessment of the value of the proposed equity stub and to an
evaluation of the financing and completion risk for a highly leveraged
transaction of the kind you propose.
8.Please provide the form of any shareholder agreement, or any pertinent
term sheet, governing the relationship between the Icahn and Southeastern
affiliated entities so the Special Committee can better understand how
decisions relating to the transaction and the Company would be made
following the signing of a definitive agreement and following closing of
If you have questions about the requested information, please contact Roger
Altman, Will Hiltz or Naveen Nataraj at Evercore Partners.
Very truly yours,
The Special Committee
of the Board of Directors
of Dell Inc.
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
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 filed with the
SEC a preliminary proxy statement and other documents relating to the proposed
merger on May 10, 2013. When completed, a definitive proxy statement and a
form of proxy will be filed with the SEC and mailed to the Company’s
stockholders. Stockholders are urged to read the definitive 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
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, email@example.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
Dell Inc. (NASDAQ: DELL) listens to customers and delivers worldwide
innovative technology, business solutions and services they trust and value.
For more information, visit www.Dell.com. You may follow the Dell Investor
Relations Twitter account at: http://twitter.com/Dellshares. To communicate
directly with Dell, go to www.Dell.com/Dellshares.
Contacts for the Special Committee:
Sard Verbinnen & Co
George Sard/Paul Verbinnen/Jim Barron/Matt Benson
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