Proxy firm backs Michael Dell's buyout offer

• Michael Dell %26 Silver Lake want to take the PC manufacturer private%2C offering %2413.65 per share
• Carl Icahn%27s higher offer would keep 40%25 of Dell public
• Shareholder vote is scheduled for July 18

NEW YORK (AP) — Dell shares jumped 2.9% Monday after a top proxy advisory firm recommended the PC maker's shareholders approve a founder-led deal to take the company private.

Founder Michael Dell and Silver Lake Partners investing firm are offering to buy Round Rock, Tex.-based Dell for $13.65 per share, or a total of $24.4 billion.

In a report out over the weekend, Institutional Shareholder Services, a corporate governance advisory firm, pointed to the offer's hefty premium, a 26% premium to the share price when the offer was made, and the benefits that come with an all-cash financed bid.

Michael Dell is trying to buy the company he founded at a "bargain price," Carl Icahn, billionaire investor and Dell's second-largest shareholder said late Sunday.

Icahn reiterated the benefits of his counter offer that would keep about 40% of the company's shares publicly traded. He is offering $14 a share to buy about $16 billion worth of Dell stock and would finance the deal by significantly adding to Dell's debt load.

The plan of Icahn and Southeastern Asset Management to buy back up to 1.1 billion Dell shares at $14 each would be funded with $5.2 billion in debt, $7.5 billion in Dell's cash on hand and $2.9 billion from the sale of Dell receivables. Icahn has said he and his affiliates have $5 billion in existing equity and proposed debt financing to help fund their proposal.

Michael Dell says he can turn his beleaguered company around by taking it private and diversifying into niches, such as business software, data storage and consulting. The company's board backs Michael Dell's proposal and has expressed concerns about Icahn's financing.

Shareholders are scheduled to vote on the buyout offer at the company's annual meeting on July 18. The ISS report said that if shareholders reject the Dell offer, they should be willing to hold Dell shares, which may get hit as the company continues to transform itself amid the deteriorating PC industry.

A special committee of Dell's board evaluating the company's options said in a statement that it was pleased with the recommendation, noting that it believes not going forward with the sale would expose the company and its shareholders to "serious risks" that would further reduce the company's value.