Show Hide image

Michael Dell gains support of Institutional Shareholder Services for buyout offer

Shareholders of Dell Inc. are slated to vote on the offer on 18 July.

Institutional Shareholder Services, a US-based shareholder advisory firm, has recommended that shareholders in Dell Inc. consider the $24.4bn buyout offer made by Dell CEO Michael Dell.

Michael Dell’s offer of $13.65 per share is supported by equity funding from investment firm Silver Lake.

The shareholders are slated to vote on Michael Dell’s offer on 18 July.

The Dell CEO does not plan to increase the offer price for per share, reports Reuters, citing people familiar with the matter.  

Michael Dell intends to make the company private in an effort to shift the firm’s dependence from lower-margin PC business to higher margins products and services such as storage systems, security software.

In the first quarter of fiscal 2014, Dell posted a 79 per cent drop in net earnings to $130m, compared with $635m for the same period a year ago, due to sluggish demand for personal computers and narrower margins.

ISS’s backing for Michael Dell may influence the investors who are looking for a new direction, especially in a scenario where billionaire activist investor Carl Icahn and Southeastern Asset Management have made a competing offer of $14 per share.

In order to accept Icahn’s bid, shareholders will have to first reject Michael Dell's offer and then elect a new group of directors.

Brian White, an analyst at Topeka Capital Markets, was quoted by Reuters as saying that ISS considers that Icahn's offer comes with a great deal of uncertainty.

Getty Images.
Show Hide image

Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.