Northern, WI 02/06/2013 (wallstreetpr) – According to unidentified sources who are well-informed on the topic, Silver Lake Management and the CEO of Dell Inc. (NASDAQ:DELL) Michael Dell have agreed to limitations that include an increased reverse breakup fee and restrictions on the ability to mach offers for Dell. This is a way to make a deal that will withstand the scrutiny of its shareholders.
The $24.4 billion leveraged buyout was agreed to yesterday. According to the terms of the agreement, the group that is led by Silver Lake would have to pay $750 million if they do not stick to the deal. Dell and its special board committee would also be allowed to file a lawsuit against Silver Lake group if they bail out of the deal. A professor of Robert H. McKinney School of Law at Indiana University Antony Page said, “They are trying to protect the shareholders. It’s a recognition that if the buyer breaches contract, then the shareholders are hurt more than the company. The hope is that this will require the buyer to go through with the deal and the shareholders will get their premium.”
According to these sources, in August, Michael Dell has agreed to cooperate with any private equity firm that makes the best offer. That condition still needs to be abided and he has to take into consideration any offers that may exceed the one that the Silver Lake group has made.
According to experts, it is unlikely that a third party will offer a bid. Michael Dell has given the shareholders of the company 45 days for the solicitation of a new bid from a rival group. The new bidders would be charged less than what is normally charged for termination. $180 million is a breakup fee that is significantly lower than the value of the deal. It is less than one per cent when normally it is two or three per cent.
The shares of Dell Inc. (NASDAQ:DELL) were up by 0.60% and currently trading at $13.50
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