Founder and chairman of Dell computers Michael Dell passes a screen projection before speaking at a news conference in Sydney August 14, 2006.

SAN FRANCISCO | Thu Feb 14, 2013 12:52pm EST

SAN FRANCISCO (Reuters) - Dell Inc Chief Executive Michael Dell, aiming to clinch a $24.4 billion deal to take the No. 3 PC maker private, agreed to value his 16 percent stake in the company at about 2 percent below the price offered to other shareholders, company filings on Thursday showed.

The founder, who informed his board in August of his intention to remove the struggling company from Wall Street's scrutiny, agreed after extensive negotiations that his equity stake would be valued at $13.36 a share, versus the $13.65 offered eventually.

Negotiations with Silver Lake kicked off in October. Dell revealed that the private equity firm raised its proposed offer price at least once during ensuing discussions.

"To facilitate a price increase by Silver Lake, Mr. Dell and related persons agreed that their shares to be rolled over in the proposed transaction would be valued only at $13.36 per share as opposed to the $13.65 price offered to the company's unaffiliated stockholders," the filing read.

The proposed leveraged buyout, the largest private-equity backed deal since the financial crisis, is being led by Michael Dell and Silver Lake, and pits Dell's board against the company's top independent investors.

Top two shareholders, Southeastern Asset Management and T. Rowe Price, have been among the most vocal opponents of the deal, which they say severely undervalues the company, despite the challenges it faces in a shrinking PC market and intense competition in enterprise software and services.

The deal is up for a shareholder vote around June or July, the company said in Thursday's filing. It will need a majority of shareholders, excluding Michael Dell, to be approved.

Dell's board, which formed a special review committee of independent directors after the CEO informed them of his intentions, is now conducting a 45-day "go-shop" period, actively soliciting higher bids.

Analysts do not expect rival bidders to step forward.

WHERE'S DELL?

Dell reports fiscal fourth-quarter results on Tuesday, when analysts get their first chance to grill management on the buyout. But, in a potential disappointment for Wall Street, Michael Dell himself will not be present though he typically participates in post-earnings release calls.

The CEO recused himself from the discussion, given his leading role in the buyout, a company spokesman said.

Dell has lost 40 percent of its value since last year's peak, and is trying to reinvent itself as a seller of higher-margin services to corporations, an internal overhaul that would be conducted away from public scrutiny if the buyout goes forward.

The PC maker, whose profits fell 47 percent last quarter, is expected to report further erosion of both revenue and income next week.

Dell's revenue in the quarter is expected to slide almost 12 percent to $14.12 billion from $16.03 billion a year earlier, according to an average forecast of analysts polled by Thomson Reuters I/B/E/S.

The company, once the world's top PC maker and a pioneer in computer supply chain management, is struggling to defend its market share against Asian rivals like Lenovo.

It was hurt also by a slide in holiday-season sales of personal computers for the first time in more than five years, despite the launch of Microsoft Corp's Windows 8 operating system. Microsoft itself is providing $2 billion in financing for Dell's buyout.

Dell's worldwide PC shipments fell nearly 21 percent to 9.48 million in the last three months of 2012, from 11.97 million in the same period a year ago.

Shares of Dell were steady at about $13.79 at midday.

(Reporting by Edwin Chan; Editing by Steve Orlofsky)

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A company logo of Dell is seen on the cover of its laptop at a Dell outlet in Hong Kong October October 21, 2009.

NEW YORK | Fri Feb 1, 2013 2:22am EST

NEW YORK (Reuters) - Dell Inc is nearing an agreement to sell itself to a buyout consortium led by its founder and Chief Executive Michael Dell and private equity firm Silver Lake Partners, possibly announcing a deal as soon as Monday, according to two people familiar with the matter.

Michael Dell is expected to take majority ownership of the world's third-largest personal computer maker, which currently has a market value of $23 billion, while Silver Lake and Microsoft Corp would become minority investors, a third person familiar with the matter said.

The final price the group is expected to pay Dell shareholders could not be immediately learned. The deal would mark the largest leveraged buyout since the global financial crisis.

The transaction is set to be finalized over the weekend but the buyout consortium is working on last-minute details and the timetable could still slip, the people cautioned, asking not to be named because the matter is not public.

The investment group, which held negotiations with Dell's camp in New York on Thursday, has secured up to $15 billion of debt financing to take Dell private from four investment banks -- Barclays, Bank of America Merrill Lynch, Credit Suisse and RBC Capital, people familiar with the matter said.

Barclays is also advising Silver Lake on the transaction, along with Perella Weinberg Partners, said two of the people. JPMorgan Chase & Co is advising Dell.

Representatives for Dell, Microsoft and Barclays declined to comment. Silver Lake and Perella Weinberg could not be immediately reached for comment.

As part of the transaction, Michael Dell will contribute his existing stake of almost 16 percent in the company toward gaining majority ownership, sources close to the matter have said.

Going private would allow Dell, which has been trying to become a one-stop shop for corporate technology needs as the PC market shrinks, to conduct that difficult makeover away from public scrutiny.

Dell has formed a special committee of its independent directors and hired Evercore Partners Inc to assess whether the company is getting the best deal for shareholders and not one that is just in the best interest of Michael Dell, several people familiar with the matter have told Reuters previously.

(Additional reporting by Poornima Gupta in San Francisco and Bill Rigby in Seattle; Editing by Edwina Gibbs)

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Sat Oct 13, 2012 12:45pm EDT

n">(Reuters) - Shareholder lawyers may have embarrassed just about every top executive in the U.S. private equity industry with allegations of a wide conspiracy to rig deal prices during last decade's buyout boom, but proving their case will be a different matter.

Legal experts say much of the alleged collusion outlined in the antitrust lawsuit may have been nothing more than firms working together in perfectly acceptable ways to spread the risk of taking on a big investment. The practice, they say, allowed the investment firms to pursue the largest deals and offer premiums to shareholders.

A lack of action by the U.S. Department of Justice in a parallel antitrust investigation could also suggest there are few grounds to go after the industry. That probe dates to 2006, according to the lawsuit and regulatory filings from some private equity firms.

"If these allegations are true, and if the DOJ has been investigating since 2006, one wonders then why didn't the DOJ do anything?" said Maurice Stucke, a former Justice Department antitrust prosecutor who is now a professor at the University of Tennessee College of Law.

The Justice Department declined to comment.

The Boston federal judge overseeing the case released a mostly unredacted version of the complaint this week. The defendants had objected, arguing that competitive information about deals should remain blacked out from public view.

One exchange appears particularly revealing. According to the lawsuit, Blackstone Group LP President Tony James wrote in an email to KKR & Co co-founder George Roberts: "We would much rather work with you guys than against you. Together we can be unstoppable but in opposition we can cost each other a lot of money."

Roberts, the lawsuit said, replied later that day: "Agreed."

The emails were allegedly sent after KKR decided to step down in the $17.6 billion bidding for semiconductor company Freescale in 2006. A group led by Blackstone eventually won.

Blackstone, KKR and Roberts declined to comment. James did not return a call for comment.

Many lawsuits contain snippets of emails or other conversations involving defendants, and legal experts note that such excerpts may not tell the whole story.

In one instance, the plaintiffs accuse KKR of having "bragged" to its investors in 2005 that "Gone are the days when buy-out firms fought each other with the ferocity of cornered cats to win a deal."

But those words were not KKR's. The firm cited this sentence, which originally appeared in a March 31, 2005, article in The Economist magazine, in a presentation to investors discussing the trend of so-called club deals in which buyout firms pursue acquisitions together, according to KKR spokeswoman Kristi Huller. She said the quote was a bullet point in the presentation and was clearly cited as being from the magazine.

Chris Burke, a lawyer for the plaintiffs, said it was not misleading to include the KKR presentation in the lawsuit without more explanation.

"Was it lifted out of context? No," said Burke, of law firm Scott + Scott. "Was it out of an Economist article? Sure."

PRICE-RIGGING ALLEGATIONS

In the lawsuit, the plaintiffs contend that KKR, Blackstone, Bain Capital Partners LLC, the Carlyle Group and others conspired to suppress prices of takeover targets, hurting shareholders in many companies purchased in the deal boom between 2003 and 2007.

Mitt Romney, the Republican presidential candidate and a Bain founder, left that firm in 1999, before the transactions in question. He is not named in the complaint.

In one email cited prominently in the opening pages of the complaint, Silver Lake Partners co-founder Glenn Hutchins seemingly anticipated that his fund would participate in rivals' future deals after bringing a half dozen others into the 2005 buyout of SunGard Data Systems.

"We invited you into Sun(G)ard and have a reasonable expectation of your reciprocating," Hutchins wrote to Blackstone's James, according to the complaint.

Silver Lake and Hutchins declined to comment.

Legal experts say email exchanges among top executives at rival firms do not necessarily mean collusion. While firms competed on smaller deals, they were increasingly working together to spread the risk of larger buyouts and needed to talk to one another, experts said.

The evidence in the emails "is pretty thin gruel," said Hays Gorey, a partner with the GeyerGorey law firm and a former Justice Department antitrust prosecutor.

"Without proof that each conspirator 'got something,' it's simply not believable that they were joint actors," said Gorey, who is not involved in the lawsuit.

The case, filed in 2007, seeks class-action status. Suits by several pension funds and individual shareholders were combined, and after being allowed to move forward, the plaintiffs updated the complaint with the fruits of their investigations into 11 private equity firms.

Burke, the plaintiffs' attorney, said substantial evidence of collusion has been uncovered and noted that the judge allowed him to expand his investigation to 27 deals, up from nine initially.

In every deal, he said, no rival ever offered a counter bid once a target company's board accepted a written offer from a buyout firm.

"It's a complete absence of competition. That's thin gruel?"

A trial could be at least a year away. Assuming the case survives summary judgment, a move by defendants to get a case thrown out before trial, Burke said the next hurdle likely would be a fight to formally recognize the case as a class action.

The buyout firms potentially could be on the hook to compensate the selling shareholders for what they should have received in a competitive auction.

In some antitrust cases, plaintiffs can receive three times the damages they suffered. The plaintiffs claim that the 2006 buyout of hospital chain HCA alone was depressed by $1 billion due to the alleged collusion.

It may be harder to make similar claims on other deals, such as the $45 billion takeover of power company TXU. In that deal, a consortium of KKR, TPG Capital, Goldman Sachs Group Inc's private equity arm and others teamed up, agreeing to pay a premium of more than 20 percent for the company.

"Many of these deals could not have been done by one firm individually, you need to pool the firms together," said University of Chicago Professor of Finance Steven Kaplan.

KKR has taken significant writedowns on the TXU acquisition, the largest buyout in history. Even if the plaintiffs prove collusion on the deal, they may not be able to prove damages, said Robert Miller, a law professor at the University of Iowa.

(Reporting By Tom Hals in Wilmington, Delaware, and Mike Erman in New York; Additional reporting by Nate Raymond in New York; Editing by Martha Graybow and Eric Beech)

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