The Deal: Dell Buyout Team Offers Late Sweetener

NEW YORK ( TheStreet) --Michael Dell and Texas-based private equity firm Silver Lake Partners will increase their bid to acquire personal computer maker Dell ( DELL) through a pair of dividends that market watchers say will close the deal.

News of the negotiations and a raised bid came as shareholders gathered for a morning meeting on Friday to vote on the buyout offer.

Shares of the Round Rock, TX-based Dell were higher on the news, gaining 5.29% to $13.64, one cent below the original $13.65 offer price Dell and Silver Lake initially made.

Dell's special committee moved the vote to Sept. 12 on the improved bid.

Over and above this week's offer to raise the price to $13.75 per share, the buyout partners are offering a special dividend of 13 cents and another anticipated quarterly dividend of 8 cents, the PC maker's special committee said in a statement early Friday.

New terms also reduce the potential breakup fee from $450 million to $180 million, according to the committee statement.

Instead of pushing to rearrange the voting structure of the transaction--which the group did in their last bid increase, prompting activist investor Carl Icahn to file a lawsuit to block the move--the team this time wants to change the record date for shareholders eligible to participate in the vote to Aug. 13. The prior record date was June 3.

This will increase the participation of arbitrageurs who have recently piled into Dell hoping to score quick gains after the deal's likelihood of success was at risk during the drawn-out negotiations, something that also could work in favor of the offer.Altogether, the added dividends will cost $470 million more, pushing the price of Dell about $24.8 billion--making it one of the 10 largest leveraged buyouts of all time. Dell and Silver Lake previously pledged to spend $13.75 per share to buy the PC maker, if they could rearrange the voting structure of the deal to shift the odds in favor of their completing the transaction. That proposal, had it been accepted by the Dell special committee overseeing the sale process, would have meant that abstentions wouldn't have counted against the deal, which was likely to have swung the vote in the bidders' direction.

But the special committee rejected it earlier this week, while activist investor Carl Icahn filed his lawsuit to block the proposed move.

Neither Dell's special committee nor Icahn's representatives responded to requests for further comment.

Dell stock, after slipping below $13 per share more than a week ago as investors became pessimistic about the deal's odds, were up 5% Friday morning to around $13.60 per share.

--Written by Jonathan Marino in New York--

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