Michael S. Dell received a strong endorsement from the Institutional Shareholder Services, a very influential shareholder adviser who's endorsement could end the months long battle over control of Dell Inc.
The Institutional Shareholder Services (I.S.S.) is the biggest American proxy advisory firm. On Monday, they backed Mr. Dell's 24.4 billion takeover bid for the company he founded 29 years ago in his dorm room and still has a 16 percent stake in. The I.S.S. recommended Dell Investors accept the $13.65-a-share buyout offer made by Mr. Dell and the investment firm Silver Lake. Other such firms, like Glass Lewis & Company, made similar recommendations later in the day.
According to the New York Times Mr. Dell and Silver Lake have been battling it out with critics o the leveraged buyout offer, most notably with the billionaire investor Carl C. Icahn and the asset management firm Southeastern Asset Management, two very big shareholders for the company.
According to the report filed by the proxy adviser, it argued that Mr. Dell and his partner were offering a significant premium for Dell's shares, about 25.5 percent higher than where the stock was trading before word of the potential deal found its way into the public rumor mill. The Times points out that the most notably part of the deal is the fact Dell will let its shareholders sell their holdings to investors willing to shoulder the huge risks facing the company as it attempts to shift its focus away from computer making and manufacturing to the more lucrative business of corporate software and services.
"The risk may be less that he's taking all the upside for himself than that he is trying to catch a falling knife," I.S.S. wrote of Mr. Dell. "From a public company shareholder's perspective, if your C.E.O. is willing to buy your falling knife for the privilege of catching it, there is probably a price at which you should let him."
Dell's shares closed over 3 percent on Monday, at $13.44. They had fallen on Friday when Mr. Dell was rumored to not raise his offer, endangering the prospects of this deal. I.S.S.' recommendation is widely regarded in the corporate elections world, however, it is by no means something that is set in stone as many shareholders have ignored past reports.
