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Michael Dell: We Need To Transform, And Do It Quickly

Last week Michael Dell sent an open letter directly to company shareholders, telling them that the company needs to transform, and to do so quickly.

The letter to stockholders arrives after the company said on July 18 that a vote on the $24.4 billion buyout had been delayed because not enough shareholders have weighed in on the buyout. "Today’s Special Meeting of Stockholders was convened and adjourned to provide additional time to solicit proxies from Dell stockholders," the company said on July 18. "No vote was taken on the proposed transaction prior to the adjournment."

That new meeting was supposed to take place on Wednesday, July 24. However, the Special Committee instead said it received a revised proposal from Michael Dell and global technology investment firm Silver Lake under which they would increase the buyout price to $13.75 per share in cash, subject to certain conditions. Because of the new development, the Special Meeting will be adjourned to August 2, 2013.

"In light of the revised proposal, which the Special Committee is evaluating with the assistance of its financial and legal advisors, the Special Meeting of Stockholders previously scheduled to be reconvened today at the Dell Round Rock Campus will be adjourned to August 2, 2013 at the same location," the company said.

The proposed amendments include the increase to $13.75 in cash per share of company common stock, and a modification to the "Unaffiliated Stockholder Approval" agreement that allows "the will of the majority of the unaffiliated shares that vote on the transaction to control the outcome." Previously, the agreement allowed non-voting shares to count against the transaction, thus even if the majority of the voters approve of the buyout, they may be defeated thanks to the non-voters. Michael Dell called this "unfair."

The proposal clearly states that Dell and Silver Lake are not willing to discuss further increases or the $13.75 increase without the change to the "Unaffiliated Stockholder Approval" requirement. "I believe this offer is in the best interests of the company and our shareholders," Michael Dell said in his letter. "Certain other parties have been proposing alternatives such as leveraged recapitalizations, sales of assets and other steps that I believe would be destructive to the company and that I do not and will not support."

"I believe that taking Dell private is the right thing to do for the company," he said. "We need to transform, and we need to do it quickly.  The transformation is not without risks and challenges, and I believe that we can do what we need to do better as a private company than a public company."

"The decision is now yours," he added. "I am at peace either way and I will honor your decision."

The full open letter from Michael Dell can be read here.