Dell and Silver Lake Hold the Line and ISS Agrees (DELL)

Michael Dell and Silver Lake Management LLC finally said, “Enough is enough.” According to sources who told Bloomberg, CEO Dell and his partners at Silver Lake, who have offered $24.4 billion to take Dell (NASDAQ: DELL) private, have decided that their $13.65 per share offer represents a significant premium on what the stock would trade for should the deal fall through.

Dell shares dropped 2.1 percent to $13.03 on the rumor Friday. Shareholders will vote on Dell’s proposal July 18.

Billionaire shareholder, Carl Icahn, with an 8.7 percent stake in the company has mounted a counter proposal to keep the company public. Icahn said recently that he has secured $5.2 billion in financing to back up his plan, which calls for the company to make a tender offer for 1.1 billion shares at a price of $14 each.

Icahn claims the Dell/Silver Lake offer is too low and does not afford shareholders an opportunity to profit in the event Dell’s performance improves.

Friday, Bloomberg reported that people familiar with the situation said that Institutional Shareholder Services Inc. (ISS) favored Icahn’s approach and was leaning toward a recommendation that shareholders vote against Dell’s proposal.

However, in an apparent reversal early Monday, according to Bloomberg, ISS said investors should accept Dell’s offer, citing a 25.5 percent premium on Dell’s share price absent a deal.

Related: Dell Shares Climb As ISS Recommends Go-Private Offer, Ignore Icahn Bid

The country’s biggest shareholder-advisory firm also pointed to the value of an all-cash offer and transfer of risk in light of Dell’s declining PC business as reasons behind its decision to support the Dell/Silver Lake bid.

The ISS apparent change of heart, along with a recommendation for Dell shareholders to take the deal by ISI Group in San Francisco could provide all the momentum Dell and Silver Lake need.

To back up its “take the deal” recommendation, ISI Group analyst, Brian Marshal, said, “This company is in dire straits. They’ve got a lot of hurdles they need to surmount, and ultimately, if they vote down this proposal, the total outcome for investors is going to be less than the $13.65.”

In addition, according to USA Today, a Dell special committee said that Icahn lacks adequate financing for his proposal that his valuation of the company is not realistic, and that shares would tumble if the sale were rejected.

Icahn responded with a letter to stockholders suggesting the special committee was attempting to influence an anticipated recommendation by Institutional Shareholder Services.

Michael Dell has said he wants to take the company private in order to concentrate on rebuilding Dell as a supplier of data center equipment and software.

At the time of this writing, Jim Probasco had no position in any mentioned securities.