THE WALL STREET JOURNAL.
BUSINESS | May 6, 2013, 6:57 p.m.
Dell Deal Negotiator Walks
Director Alex Mandl Squeezed
Michael Dell, Others for Higher Offers but Some Big Holders Still Angry
Last August, Alex Mandl was
hosting dinner guests in his Great Falls, Va., home when Michael
Dell's number popped up on his cellphone. Mr. Mandl, Dell Inc.'s lead
director, excused himself for what he expected would be a routine check-in
with the Dell chief executive ahead of a quarterly earnings report.
Instead, Mr. Dell told Mr. Mandl he was discussing ways to take Dell
private. Nearly 20 minutes later, Mr. Mandl returned to the table looking
distracted. "Is everything OK?" one guest asked.
phone call vaulted Mr. Mandl, a 69-year-old telecommunications veteran, into
a high-stakes negotiation over the future of the computer maker, which
brings in about $57 billion in annual revenue. It was a major test for an
Austrian-born businessman best known for striking deals in the early days of
the cellular industry.
Several large Dell shareholders
oppose the $24.4 billion deal the board struck with Mr. Dell. One investor,
Carl Icahn, has reserved the option to oust Dell's board, a person
familiar with his thinking said.
Because Mr. Dell eventually allied himself with private-equity firm Silver
Lake Partners to take Dell private, it has been up to Mr. Mandl to defuse
worries that Mr. Dell had an inside track to buy the company on the cheap.
head of a special board committee weighing the company's possible sale, Mr.
Mandl has been an unflappable negotiator, has worked long hours, and dug
into proposal details, said people close to the talks. "At times it
certainly has been a full-time job and I have had to make adjustments," said
Mr. Mandl in a recent interview in New York, wearing a crisp shirt and navy
blazer. "There are still a number of uncertainties out there to work
through, and we will do what we need to do to bring the result to the right
conclusion for the shareholders," Mr. Mandl said.
While Mr. Mandl initially was skeptical of a buyout, he shuttled between Mr.
Dell and Egon Durban, Silver Lake's point man in the buyout talks, to make
sure Dell shareholders got the best deal possible, said people close to the
lead director also checked on Dell executives' conversations with would-be
buyers to ensure managers were forthcoming about financial information. And
he coaxed balking financiers back to the table when talks ran aground, they
He "is a very strong director and
a very strong leader,'' said William Gray III, a Dell director and a former
U.S. congressman. Mr. Mandl has had an unenviable task. Potential buyers
doubted they could make money on a Dell buyout, directors lost faith in
management financial projections, and PC sales fell faster than the board
expected, said the people involved in the negotiations. Starting in March,
at the end of a 45-day "go shop" period seeking alternative offers for Dell,
Mr. Mandl haggled with private-equity firm
Blackstone Group LP and investor Mr. Icahn over tentative bids.
Blackstone Group has dropped out of the bidding and Mr. Icahn isn't likely
to buy Dell. That means Mr. Mandl now must keep Mr. Dell's deal on track and
convince shareholders the $13.65-a-share offer is fair. Mr. Mandl already
has spoken to shareholders wary of the buyout and plans to continue his
outreach ahead of the shareholder vote. Dell shares closed Monday at $13.29.
has been as methodical and thorough a process as you could want, and that is
due to Alex," said Ken Duberstein, another member of Dell's special
Mandl also has run into critics. Some have said the director narrowed the
list of potential buyers too soon, didn't dig deeply enough into
alternatives to taking Dell private, and failed to lock up support from
another investor, Southeastern Asset Management Inc., that has vocally
opposed the deal.
"Southeastern has been working
hard to secure a better outcome for our clients through a superior offer or
a rejection of the current bid," the investment firm wrote in an April
letter to its clients. Southeastern said in an April letter to its clients
that Dell's board deliberations "focused on giving
Michael Dell what he wants as opposed to pursuing credible better
alternatives for shareholders and the business."
Mr. Mandl, who was born and lived
in Austria until he was 15, moved to the U.S. with his parents and attended
college here. He moved up the corporate ranks and joined
AT&T Inc. in 1991 as chief financial officer.
Former colleagues credit Mr. Mandl with leading AT&T's strategy to buy its
way into the cellphone market. Mr. Mandl's courtship of McCaw Cellular, for
instance, resulted in a 1994 acquisition for about $11.5 billion.
purchase "was one of the better things that AT&T did," said R. Gerard
Salemme, a former McCaw Cellular and AT&T executive. "Alex was a good
In 1996, Mr. Mandl jumped ship to
run startup telecom firm Teligent Inc., which went bankrupt in 2001, just
weeks after he was pushed out as CEO. Mr. Mandl then ran struggling French
digital-security company Gemplus International SA, which he turned around
before striking a $1.1 billion deal to merge with
Axalto Holding NV in 2005. He is its nonexecutive chairman.
recruiter approached Mr. Mandl about joining Dell's board. He did so in 1997
and 13 years later was named independent presiding director—essentially the
boss of the board on areas where Mr. Dell had a conflict. When the Round
Rock, Texas, company enjoyed good times, directors rarely challenged Mr.
Dell on business strategy, said people familiar with board discussions.
more recent years, however, these people said Mr. Mandl and other directors
have pressed Mr. Dell and other executives about company strategy.
spokesman for Dell declined to comment on the board's dealings with Mr.
Dell, and said Mr. Dell also declined to comment. Larry Tu, Dell's general
counsel, said Mr. Mandl "has helped guide Dell through a period of
unprecedented growth and change."
Mr. Dell informed directors about the potential of taking Dell private last
summer, people familiar with the matter said Mr. Mandl was among the board
members skeptical about the idea amid the company's tough attempted
transition from PC and server maker to a broader corporate software and tech
Through the fall, Mr. Mandl and other directors worried whether Dell's
shifting internal financial outlooks meant management couldn't accurately
predict future financial performance, according to a March regulatory
filing. Those concerns—and a sinking PC market—helped spur directors to
accept the buyout deal, said people familiar with the board deliberations.
Mr. Mandl has since spent
thousands of hours working on the negotiations. In mid-January, he salvaged
negotiations with Silver Lake after private-equity firms
KKR & Co. and TPG dropped out—and Silver Lake was close to walking away,
said people briefed on the negotiations.
Mandl called Mr. Dell and asked if the CEO planned to stay as CEO if the
buyout floundered, according to a March regulatory filing. Mr. Dell said he
remained committed to the company.
same month, Mr. Mandl spent one weekend pushing for a $1.5 billion price
increase the board wanted from Silver Lake. In a flurry of phone calls,
Silver Lake's point man on the deal said he couldn't budge on price and that
he had to tell his partners the deal likely was dead.
ahead," Mr. Mandl replied, a person close to the talks said. The next day
Silver Lake agreed to raise its offer for Dell. Silver Lake declined to
comment. After further back and forth, Dell said publicly in February it
would go private.
Mr. Mandl is planning for the shareholder vote and overseeing the board's
dealings with the Securities and Exchange Commission, which must clear
Dell's regulatory disclosures related to the deal. He also is prepping for
the possibility of curveballs to come from Mr. Icahn, Silver Lake or Dell
Other Dell board members said Mr.
Mandl has handled the situation well given the circumstances.
brief biography of Dell's lead director.
Biggest career accomplishment: Overseeing deal for McCaw
Cellular as AT&T's finance chief
Biggest setback: Teligent Inc. filed for Chapter 11 a month
after Mr. Mandl resigned as CEO
First job: Began his professional career as a mergers and
acquisitions analyst at Boise Cascade
Education: M.B.A., University of California at Berkeley;
B.A., Willamette University
Boards: Dell, Gemalto NV, Arise Virtual Solutions Inc.
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version of this article appeared May 7, 2013, on page B1 in the U.S. edition
of The Wall Street Journal, with the headline: Dell Deal Negotiator Walks
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