Dell Inc. investors should accept founder Michael Dell's $24.4 billion leveraged buyout plan for the company, Institutional Shareholder Services Inc. said in a surprise endorsement of the deal.
ISS, the biggest shareholder advisory firm, cited a 25.5% premium to Dell's unaffected share price, the certainty of value provided by an all-cash offer and the transfer of risk given Dell's deteriorating PC business among reasons for supporting the bid. Mr. Dell, CEO of the company, proposed to repurchase company shares at $13.65 each with partner Silver Lake Management.
ISS' influential recommendation could sway the final outcome because institutional investors look to ISS' findings for guidance on how to vote their shares. It also lessens pressure on Mr. Dell to sweeten his offer. He is contributing his 16% ownership in the company at $13.36 apiece compared to the $13.65 offered to other shareholders and another $750 million in cash.
The stock closed at $13.44 in New York on July 8.