Michael Dell Discloses He’ll Take Less Than Others In $24.4B Buyout Deal

Michael S. Dell, who built Dell Inc. (NASDAQ:DELL) into the No. 3 PC maker by selling units below most competitors' prices, agreed to lower the value of his shares to below the $13.65 offered by Silver Lake Partners and Microsoft Corp. (NASDAQ:MSFT) to buy the company for $24.4 billion.

Dell, who owns a 15.7-percent stake in the company, or about 243.4 million shares outright, said he agreed to sell them for $13.36 a share, or about $3.25 billion, rather than the $3.32 billion he otherwise would have received.

The disclosure was made in a filing with the Securities and Exchange Commission on Thursday in which Dell, 47, said the discount came during “final stage negotiations” with Silver Lake, the Menlo Park, Calif.-based private equity firm managing the deal, and a special committee of directors of the Round Rock, Texas-based company that didn’t include the CEO.

The filing confirmed that Dell advised the board of directors last August that he was considering taking the company he’d founded in 1984 private, which led to the creation of the special committee, chaired by director Alex Mandl, a former president of AT&T Inc. (NYSE:T), the No. 1 telecommunications carrier.

Thereafter, three private equity firms were invited to present bids. The losers weren’t identified.

The deal was announced on Feb. 5. Dell will contribute his entire stake as well as additional capital in his private holding company to the deal, with about $1 billion from Silver Lake and a $2 billion loan from Microsoft Corp. (NASDAQ:MSFT), the No. 1 software company. About $15 billion will be raised by bank loans.

However, the special committee said it would consider a higher offer for 45 days. The committee is advised by Evercore Partners (NYSE:EVR), a New York investment advisor.

Dell himself has agreed to “remain available in good faith with any competing bidder,” the filing said, and he promised to vote with shareholders to approve a better deal, although he won’t roll over his shares into a competing transaction.

If no higher bid emerges, the special committee will file a proxy statement with more details as well as the timing of a special meeting of shareholders to approve the details within five days of the 45-day period, the company said. Pending regulatory approval, the earliest date would be in June.

Dell officials haven’t commented on the buyout, the second-largest ever in technology, since it was announced. Dell is scheduled to report fourth-quarter results on Feb. 19, with CFO Brian Gladden handling questions from investors because Dell doesn’t plan to participate.

Several large shareholders including Southeastern Capital Management and T. Rowe Price (NASDAQ:TROW) have announced they plan to vote against the buyout because it undervalues the company.

Shares of Dell fell 5 cents to $13.72. They first traded above the $13.65 buyout price on Monday, following the opposition from the big institutions.