Michael Dell and Silver Lake Reach Last-Minute Buyout Deal

Michael Dell and the private equity firm Silver Lake have raised their offer to take Dell Inc. private to $13.75 a share, with a 13-cent-per-share special dividend.

The new deal, reached mere hours before a shareholder vote was scheduled to take place, values the company at nearly $24.9 billion.

Sources familiar with the negotiations say that a deal was reached in principle Wednesday night, and that details were worked out into the night on Thursday.

The special committee of Dell’s board moved the shareholder vote from today to Sept. 12, buying more time to solicit shareholder support.

In exchange for the higher offer, Dell and Silver Lake would receive the voting rights modifications they requested last week. Those modifications would give the buyout proposal a chance of passing a shareholder vote. Under current rules, non-voting shareholders are counted in the “opposed” column on the shareholder vote. Because CEO Michael Dell is not allowed to vote, the majority of shareholders needed is 43 percent.

According to sources familiar with the terms of the deal, the 13-cent dividend is being underwritten by Michael Dell, who is moving his own shares of the company into the financing pot as a “substantial discount.” Exact terms of this portion of the deal couldn’t be learned, but will be disclosed in a forthcoming filing with the U.S. Securities and Exchange Commission next week. Previously, the CEO had rolled his own shares into the financing package at a value of $13.36.

Earlier this week, the deal appeared to be near collapse, after the special committee rejected an earlier request by Dell and Silver Lake to change the voting rules.

Carl Icahn, the activist investor and Dell’s second-largest shareholder, opposes the buyout and has proposed his own recapitalization plan, offering $14 a share for up to 72 percent of company shares, a special dividend paid out of cash and new debt, and warrants to buy more shares over the course of seven years.

Here’s the statement from Dell, which crossed the wires about two minutes ago: