Dell board recommends buyout offer from CEO Michael Dell

The Dell board is standing behind a buyout offer from the company's CEO and founder, Michael Dell, and has asked shareholders of the slumping PC maker to approve the deal in a July 18 vote.

The company's announcement last week is the latest volley in a battle with prominent shareholders over the company's future and Michael Dell's role in it.

Dell directors unanimously recommended an offer from Michael Dell and the investment firm Silver Lake Partners to take the company private for $24.4 billion, or $13.65 per share, according to filings with the Securities and Exchange Commission (SEC).

A board special committee told shareholders in an open letter on Friday that Michael Dell's plan was the best option, and that it offered certainty and "a very material premium" in a challenging business environment. It noted that the price represented a premium of about 37 per cent over the stock's average closing price in the months before rumors about a potential deal surfaced.

But Dell's largest independent shareholder, Southeastern Asset Management Inc, urged shareholders in a letter to reject Michael Dell's offer. It said it that it will provide more details about its own offer in the near future.

"We are a long-term investor in Dell and (like you) we care about our investment," the letter said.

Southeastern teamed with billionaire investor Carl Icahn in May to pitch an alternative plan that would let Dell shareholders keep their stake in the company and give them either $12 per share in cash or additional shares.

Dell's committee has said that it needs more information on that proposal. The committee also said that shareholders would face substantial risks if the company took on debt to pay for a special payout, a process known as "leveraged recapitalization." With the buyout, the risk shifts to the parties buying the company.

Icahn and Southeastern own more than 12 per cent of Dell shares combined, a total that trails only Michael Dell. They have said they will work to convince other Dell shareholders to reject the Michael Dell buyout.

Icahn has nominated himself and 11 other candidates for spots on Dell's board and has said Michael Dell will no longer be running the company if his nominees gain seats.

But the company hasn't scheduled an annual meeting at which it will elect directors. The board said it may not do that if shareholders vote for the buyout at the July special meeting, which will be held at the company's headquarters.

Dell Inc and other personal computer makers have seen sales crumble because of the growing popularity of smartphones and tablets. Dell posted a 79 per cent decline in earnings for the most recent quarter.

Michael Dell believes he can turn the company around by taking it private and diversifying into niches, such as business software, data storage and consulting.