Kimihiro Hoshino/Agence France-Presse — Getty ImagesMichael Dell, the founder of the computer company that bears his name.Michael S. Dell on Friday defended his $24.4 billion bid to buy control of Dell Inc., arguing that an alternative proposal by Carl C. Icahn would severely weaken the computer company.
In a presentation to investors disclosed on Friday, Mr. Dell reiterated his argument that taking Dell private would give the computer maker cover to increase its enterprise software and services business. Keeping the company public while adding on more debt, as Mr. Icahn has demanded, would only hurt that effort.
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Document: Michael Dell's presentationMr. Dell said in the presentation that a so-called leveraged recapitalization — like the $14-a-share limited stock buyback program that Mr. Icahn has called for — would saddle the company with a highly volatile stock that would worry employees and customers.
“A leveraged recapitalization would leave the company as a widely held public company, with all of the issues that make it more difficult, slower and riskier to accomplish the company’s necessary transformation,” he wrote.
By contrast, having two committed owners — himself and the investment firm Silver Lake — would provide a stable base for that effort.
Mr. Dell’s presentation will serve as the basis of his presentation to proxy advisers like Institutional Shareholder Services over the next few days. What remains to be seen is whether Mr. Icahn, who is also expected to speak to I.S.S. early next week, will offer a similar defense of his idea.
While Mr. Icahn and another like-minded big investor, Southeastern Asset Management, have repeatedly assailed the management buyout offer as priced far too low, both have been vague about how to finance their own proposal.
Their plan calls on Dell to buy back the shares, with Mr. Icahn disclosing only a $1.6 billion financing commitment from a “major investment bank” and an offer to provide $2 billion of his own money. The rest of the financing is expected to draw on the company’s existing cash and the sale of its receivables.
The special committee of Dell’s board weighing the company’s sale has criticized Mr. Icahn’s proposal as unworkable, because there is no firm commitment from the billionaire to put his own money at risk.