Solution providers Monday applauded Institutional Shareholders Services' surprise move to back Michael Dell's plan to take his company private.
Influential proxy advisory firm ISS recommended that Dell investors accept CEO Michael Dell's $24.4 billion leveraged buyout offer to take his company private, giving some partners hope that the Round Rock, Texas-based company will remain under the leadership of its founder.
Sonia St. Charles, CEO of Davenport Group, a St. Paul, Minn.-based Dell partner, said she is extremely pleased with the ISS statement of support and hopes that it will bring a quick end to "squabbles" over who controls Dell's future.
Last week it was reported Michael Dell was facing serious headwinds with his privatization efforts and that ISS. was considering a recommendation to oppose Dell's bid.
Michael Dell faces ongoing opposition from investor Carl Icahn, who is working to keep the company public and wrestle control of Dell away from the company's founder.
St. Charles said that despite Icahn's business acumen, she believes Michael Dell knows his business better, has more skin in the game and will ultimately be a better transitional leader for Dell.
"Logistically there might not be much difference, but I believe Michael will be least disruptive when it comes to taking the company in a new direction." What's best for Dell is best for her bottom line, she said.
ISS is now backing a proposal that would have Michael Dell and investment firm Silver Lake pay $13.65 a share and take the company private. Dell has long argued that taking the company private is a necessary move in order to help it transition away from being a PC manufacturing company to one that sells corporate software and services.
"[The LBO] will allow Dell to focus on reinventing itself and innovating rather than worry about quarterly performance," said Patrick Mulvee, vice president of sales and marketing at Sidepath, a tech integrator and Dell partner based in Irvine, Calif.
Billionaire investor Icahn and Southeastern Asset Management, which together own 13 percent of Dell shares, have proposed the company buy back 1.1 billion in shares at $14 each. Icahn has argued that would allow shareholders to benefit from a successful transformation plan, and not just Michael Dell and Silver Lake.
The Special Committee of the Board of Directors of Dell released a statement emphasizing the importance of the ISS support: "We also believe rejection of this transaction would expose Dell and its shareholders to serious risks and uncertainties that will harm the company's business and erode shareholder value."
ISS recommendations come just 10 days before a July 18 shareholder vote on Dell's privatization bid.
PUBLISHED JULY 8, 2013