NYT > Home Page: DealBook: Dell in $24 Billion Deal to Go Private

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DealBook: Dell in $24 Billion Deal to Go Private
Feb 5th 2013, 14:31

9:32 a.m. | Updated

Dell announced on Tuesday that it had agreed to go private in a $24.4 billion deal led by its founder and the investment firm Silver Lake, in the biggest leveraged buyout since the financial crisis.

Under the terms of the deal, the buyers' consortium, which also includes Microsoft, will pay $13.65 a share in cash. That is roughly 25 percent above where Dell's stock traded before word emerged of the negotiations of its sale.

Michael S. Dell will contribute his roughly 14 percent stake toward the transaction, and will contribute additional cash through his private investment firm, MSD Capital. Silver Lake is expected to contribute about $1 billion in cash, while Microsoft will loan an additional $2 billion.

Dell's board is said to have met on Monday night to vote on the deal. In its statement, the company said that Mr. Dell recused himself from any discussions about a transaction and did not vote.

As a newly private company — now more firmly under the control of Mr. Dell — the computer maker will seek to revive itself after years of decline. The takeover represents Mr. Dell's most drastic effort yet to turn around the company he founded in a college dormitory room in 1984 and expanded into one of the world's biggest sellers of personal computers.

But the advent of new competition, first from other PC manufacturers and then smartphones and the iPad, severely eroded Dell's business. Such is the concern about the company's future that Microsoft agreed to lend some of its considerable financial muscle to shore up one of its most important business partners.

"I believe this transaction will open an exciting new chapter for Dell, our customers and team members," Mr. Dell said in a statement. "Dell has made solid progress executing this strategy over the past four years, but we recognize that it will still take more time, investment and patience, and I believe our efforts will be better supported by partnering with Silver Lake in our shared vision."

Still, analysts have expressed concern that even a move away from the unyielding scrutiny of the public markets will let Mr. Dell accomplish what years of previous turnaround efforts have not.

Nevertheless, the transaction represents a watershed moment for the private equity industry, reaching heights unseen over the past five years. It is the biggest leveraged buyout since the Blackstone Group's $26 billion takeover of Hilton Hotels in the summer of 2007, and is supported by more than $15 billion of debt financing raised by no less than four banks.

"Michael Dell is a true visionary and one of the preeminent leaders of the global technology industry," Egon Durban, a managing partner at Silver Lake, said in a statement. "Silver Lake is looking forward to partnering with him, the talented management team at Dell and the investor group to innovate, invest in long-term growth initiatives and accelerate the company's transformation strategy to become an integrated and diversified global IT solutions provider."

Mr. Dell first approached the board about taking the company private last August. That prompted the board to form a special committee, with JPMorgan Chase and the law firm Debevoise & Plimpton as advisers. It was charged with considering alternatives to a management buyout, including other deals or borrowing money to pay out a special dividend.

To help ward off accusations of self-dealing by Mr. Dell, the special committee has hired an independent investment bank, Evercore Partners, specifically to oversee a 45-day "go-shop" period in which the company will solicit other potential suitors.

"The special committee and its advisers conducted a disciplined and independent process intended to ensure the best outcome for shareholders," Alex Mandl, the head of the Dell independent committee, said in a statement. "Importantly, the go-shop process provides a real opportunity to determine if there are alternatives superior to the present offer from Mr. Dell and Silver Lake."

But beating Mr. Dell comes at a price. Would-be rivals that successfully make an acceptable bid within the go-shop period must pay a $180 million termination fee. If such an offer comes after the 45-day window, that payout grows to $450 million.

Dell itself was advised by Goldman Sachs and the law firm Hogan Lovells, while Mr. Dell retained Wachtell, Lipton, Rosen & Katz as legal counsel. Silver Lake was advised by Bank of America Merrill Lynch, Barclays, Credit Suisse, RBC Capital Markets and the law firm Simpson Thacher & Bartlett.

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NYT > Home Page: Japan Says China Aimed Military Radar at Ship

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Japan Says China Aimed Military Radar at Ship
Feb 5th 2013, 12:06

TOKYO — Japan lodged a formal protest with the Chinese government on Tuesday after it said a Chinese warship directed a radar used to aim missiles at a Japanese warship, in a new escalation of a standoff over disputed islands.

The Japanese defense minister, Itsunori Onodera, said that a Chinese navy frigate had directed its fire-control radar at a Japanese destroyer in the incident on Jan. 30 near the islands in the East China Sea, known as the Senkaku in Japan and Diaoyu in Chinese. The uninhabited island group has been controlled by Japan for decades, but claimed by China and also Taiwan.

On Tuesday, the Defense Ministry also disclosed that a Chinese frigate had directed the same kind of radar at a Japanese military helicopter in a previously undisclosed incident on Jan. 19. In both cases, the Chinese ships eventually turned off the radar without actually firing a shot.

Still, Japanese officials said the use of such radar was a threatening gesture that represented an increase in tensions, which have been growing since the Japanese government announced last summer that it would buy three of the five islands. The Chinese responded by sending paramilitary surveillance ships into or near Japanese-claimed waters around the islands on an almost daily basis. Those incursion were intercepted by Japanese coast guard ships in a high-seas game of cat and mouse.

The row grew more heated in December when Chinese surveillance aircraft began flying near the islands. Tensions rose another notch last month, when Japan and China both scrambled fighter jets that briefly monitored each other.

Still, the recent radar incidents are among the first to involve naval warships from both nations, which had until now been kept in the background to avoid a dangerous escalation. With tensions so high, military experts in Japan and the United States say their biggest fear is some accident or miscalculation resulting in an unintended military confrontation.

"One step in the wrong direction could have pushed things into a dangerous situation," Mr. Onodera told reporters.

The Chinese incursions are seen by Japanese political leaders and experts as part of a new strategy to press Japan into officially acknowledging that a territorial dispute exists, something Tokyo has so far refused to do. They also say that by maintaining a nearly constant presence, China hopes to undermine Japan's claims to be in sole control of the islands.

Japan has responded by stepping up its own surveillance, which includes keeping a small flotilla of coast guard ships near the islands, which are between Okinawa and Taiwan.

The purchase of the islands in September set off violent protests in China, where the islands are seen by many as the last pieces of Chinese territory to remain in Japanese hands from its foray into empire-building in the late 19th and early 20th centuries. Japan says that China only showed interest in the islands after undersea oil and natural gas deposits were discovered nearby in the last 1960s.

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NYT > Home Page: Iran Nuclear Talks to Resume This Month

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Iran Nuclear Talks to Resume This Month
Feb 5th 2013, 12:40

LONDON – Breaking a deadlock over the location and timing of new talks on its disputed nuclear program, Iran reached agreement on Tuesday with world powers to resume the stuttering dialog later this month in Kazakhstan, according to the official IRNA news agency.

The agreement to meet there on Feb. 26 came in a telephone conversation between senior officials of Iran's National Security Council and the European Union, representing the outside powers involved in the talks, IRNA said.

The news agency report followed remarks by Iran's foreign minister, Ali Akbar Salehi, who said on Sunday that his country was open to a renewed offer of direct talks with the United States on its nuclear program and that it looked favorably on a proposal for a new round of multilateral nuclear negotiations in late February in Kazakhstan.

IRNA did not immediately allude to the prospect of direct talks with the United States. Vice President Joseph R. Biden Jr. offered such discussions last weekend in what Mr. Salehi described as "a step forward." 

Iranian negotiators last met with the outside powers – the United States, Russia, China, France, Britain and Germany – for high-level talks in Moscow last June. The powers are represented by the European Union foreign policy chief, Catherine Ashton, who had suggested resumed talks on Feb. 25 to 26 in Kazakhstan.

In Moscow, Iran demanded the lifting of ever-tightening international economic sanctions as a precondition for discussions about reducing or eliminating its growing inventory of enriched uranium.

But the outside powers want Iran to suspend its enrichment program and satisfy the International Atomic Energy Agency, the United Nations nuclear watchdog, that it does not have a nuclear weapons program.

Iran denies Western accusations that its nuclear program is designed to provide access to the technology for nuclear weapons.

The Moscow talks ended in such mistrust and frustration that the negotiators did not commit to another high-level encounter.

Last week Iran told the I.A.E.A. at its headquarters in Vienna that it plans to install more sophisticated centrifuges at its principal nuclear enrichment plant at Natanz, enabling it to greatly accelerate processing of uranium.

Steven Erlanger contributed reporting from Paris.

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NYT > Home Page: Japan Protests to China After Radar Pointed at Vessel

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Japan Protests to China After Radar Pointed at Vessel
Feb 5th 2013, 10:21

TOKYO (Reuters) - A Chinese vessel pointed a type of radar normally used to help guide missiles at a Japanese navy ship near disputed East China Sea islets, prompting the Japanese government to lodge a protest with China, Japanese public broadcaster NHK said on Tuesday.

Reuters

The incident happened on January 30, the defense minister later said.

A long-simmering row over the islands, known as the Senkaku in Japan and the Diaoyu in China, has in recent months escalated to the point where both have scrambled fighter jets while patrol ships shadow each other in nearby seas.

Concern that the increasing cat-and-mouse encounters between aircraft or ships will cause an accidental clash are giving impetus to efforts to dial down tension, including a possible leaders' summit.

But while hopes have emerged of a thaw in the chill that began when Japan bought the islands from a private citizen last September, deep mistrust and pumped up nationalism complicated by bitter Chinese memories of Japan's wartime aggression mean any rapprochement would likely be fragile.

(Reporting by Kiyoshi Takenaka; Editing by Robert Birsel)

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NYT > Home Page: Ahmadinejad’s Ally Arrested in as Fight With Family Grows

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Ahmadinejad's Ally Arrested in as Fight With Family Grows
Feb 5th 2013, 10:27

TEHRAN — Iranian judicial authorities arrested a protégé of President Mahmoud Ahmadinejad on Monday, the latest round in an escalating power struggle between Iran's elected leader and the country's most influential political family.

The Tehran prosecutor's Web site announced the arrest of Saeed Mortazavi late Monday night, although it gave no official reason for the action.

The move follows the disclosure of a secret film by President Ahmadinejad on Monday in parliament, in which Mr. Mortazavi could be seen purportedly discussing a fraudulent business deal proposed by Fazel Larijani, 49, the youngest of the five brothers of the politically influential Larijani family.

The president's disclosure of the film of the meeting caused an uproar in Iran, where allegations of corruption are usually made behind closed doors.

The ensuing arrest of Mr. Mortazavi, the president's ally, heightens the intensifying stakes in the battle. Mr. Mortazavi has been controversial figure, known for closing dozens of reformist newspapers while he was a judge. The Canadian government has implicated him in the death of an Iran-Canadian photographer in 2003. And in 2010 a parliamentary report concluded that Mr. Mortazavi, while working as a prosecutor, shared responsibility for the death of three protesters in a police prison facility.

Most recently lawmakers forced his dismissal as the head of the vast Social Welfare Organization, only to have President Ahmadinejad reinstate him as caretaker.

Traveling to Egypt on the first visit of an Iranian president to that country since the 1979 Islamic revolution, Mr. Ahmadinejad condemned the arrest of Mr. Mortazavi, saying he had discovered a crime, but was now being punished.

"The judiciary belongs to the nation, and is not a family organization," he told the state Islamic Republic News Agency on Tuesday, an apparent swipe at the Larijani family.

President Ahmadinejad, who is embroiled in political fights with both the parliament and the judiciary, has long criticized what he calls the Larijani family's grip on power in Iran. The Larijanis counter that they have all been appointed to their positions through normal procedures.

The Larijani family is well known in Iran for the high positions they hold. One of the brothers, Ali Larijani, 55, is the head of parliament and former top nuclear negotiator, another, Sadegh Larijani, 52, is an ayatollah who heads Iran's judiciary. The oldest brother, Mohammad-Javad Larijani, 61, is a Berkeley-educated mathematician, and one of the main theoreticians of the Islamic Republic's political ideology.

Ali Larijani is expected to run in upcoming presidential elections scheduled for June 14, for which president Ahmadinejad is expected to support one of his own close aides as a candidate. The accusations against the Larijani family seem aimed at portraying them and their supporters as corrupt as elections near.

Mr. Mortazavi's arrest, directly following Mr. Ahmadinejad's disclosure of the film, is remarkable given that many politicians had called for Mr. Mortazavi's arrest over the prison deaths, an incident harshly condemned by the country's supreme leader, Ayatollah Ali Khamenei.

"A person was attempting to do trades that seem illegal," Mr. Mortazavi told the Iranian Student News Agency on Monday before his arrest. "I merely reported this case to the government."

On Sunday Ali Larijani said in parliament that he had no problem with the accusations, saying it reflected more on the president's conduct. "They only show his true character," the semiofficial Fars News Agency quoted him as saying.

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NYT > Home Page: Iranian Leader in Egypt on Historic Visit

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Iranian Leader in Egypt on Historic Visit
Feb 5th 2013, 09:30

Reuters

CAIRO (Reuters) - President Mahmoud Ahmadinejad arrived in Cairo on Tuesday for the first trip by an Iranian head of state to Egypt since the 1979 revolution, underlining the more open ties that have developed since Egyptians elected an Islamist head of state.

President Mohamed Mursi kissed Ahmadinejad as he disembarked from his plane at Cairo airport, footage broadcast by Egyptian state television showed.

Such a visit would have been unthinkable during the rule of Hosni Mubarak, the military-backed autocrat whose 30 years in power safeguarded Egypt's peace treaty with Israel and resulted in deeper ties between Cairo and the West.

(Writing by Tom Perry; Editing by Janet Lawrence)

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NYT > Home Page: British Ministers Seek Support for Gay Marriage Law

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British Ministers Seek Support for Gay Marriage Law
Feb 5th 2013, 08:27

LONDON — As the British Parliament prepared to vote Tuesday on a law permitting same-sex marriage that has divided church and state, senior cabinet ministers launched a last-minute attempt to deflect an embarrassing rebellion by Conservative lawmakers against Prime Minister David Cameron's support for the new legislation.

A day after the newly-confirmed archbishop of Canterbury, Justin Welby, took office saying he shares the Church of England's opposition to marriage between people of the same gender, three cabinet officials said in a letter published in The Daily Telegraph that the new legislation was "the right thing to do at the right time."

"Marriage has evolved over time. We believe that opening it up to same-sex couples will strengthen, not weaken, the institution. Attitudes toward gay people have changed. A substantial majority of the public now favor allowing same sex couples to marry, and support has increased rapidly."

The three ministers — George Osborne, the chancellor of the Exchequer, Foreign Secretary William Hague and Home Secretary Theresa May — also asked whether it was "any longer acceptable to exclude people from marriage simply because they love someone of the same sex."

The debate has divided Britain's Conservatives, who rule in uneasy coalition with the smaller Liberal Democrats. Political analysts forecast that, when the vote is held on Tuesday evening in Parliament, it will be approved despite opposition by scores of Conservative lawmakers because the bulk of Liberal Democrat and opposition Labour legislators are in favor.

However, that outcome could embarrass Mr. Cameron since he will be securing approval for a change that he has championed with the support of his political adversaries and in the teeth of opposition from within his own ranks. The size of the likely revolt among Conservative lawmakers is uncertain, but Mr. Cameron's allies are trying to reduce it, seeing the vote as a test of his authority.

Opponents of the legislation say it will alienate traditional Conservative voters, jeopardizing Mr. Cameron's prospects at the 2015 national election. But supporters say it will bring in new backing from outside the party.

Coincidentally, the vote is scheduled a day after Archbishop Welby, 57, was confirmed in his new post to replace the Most Rev. Rowan Williams, who has retired 10 years in office.

The new archbishop, the spiritual head of the world's 77 million Anglicans, endorsed the traditional view that while the Church of England has no objection to civil partnerships between people of the same gender, it is, as a recent church statement put it, "committed to the traditional understanding of the institution of marriage as being between one man and one woman."

Ed Miliband, the leader of the opposition Labour Party, said Monday that he would be "voting for equal marriage in the House of Commons, and I'll be doing so proudly." He also said he would urge his 255 legislators in the 649-member body to vote with him, although a small group will likely vote against.

"I'll be voting for equal marriage for a very simple reason: I don't think that the person you love should determine the rights you have," Mr. Miliband said on Monday.

The legislation, which applies to England and Wales, would permit civil marriage between same-sex couples, but specifically exempt the Church of England and other faiths from an obligation to perform such ceremonies. Some faith groups, including the Quakers, have said they want the legal right to perform same-sex marriages.

In their letter, Mr. Osborne, Mr. Hague and Ms. May said: "Our party also has a strong belief in religious freedom, a vital element of a free society. The Bill ensures that no faith group will be forced to conduct same-sex marriages. The legal advice is clear that these protections for religious groups cannot be overturned by the courts."

"Religious freedom works both ways. Why should faith groups, such as the Quakers, that wish to conduct gay marriages be forbidden from doing so? This Bill will enhance religious freedom, not restrict it."

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