Dell’s largest shareholder opposes buyout deal

MarketWatchFebruary 9, 2013 

— Dell’s bold bid to go private may lead to a proxy war after the personal computer maker’s largest institutional shareholder said Friday it plans to oppose the deal.

Dell shares traded up nearly 1 percent to close at $13.63 – putting the stock on par with the price offered by the private-equity deal sponsored by founder and CEO Michael Dell and investment firm Silver Lake Partners.

Southeastern Asset Management, which owns 8.5 percent of Dell’s shares outstanding, sent a letter to the company on Friday saying: “We are writing to express our extreme disappointment regarding the proposed go private transaction, which we believe grossly undervalues the company.”

The letter was included in a filing with the Securities and Exchange Commission. The firm owns about 147.3 million shares of Dell.

The investment firm said it “will not vote in favor of the proposed transaction as currently structured,” adding: “We retain and intend to avail ourselves of all options at our disposal to oppose the proposed transaction, including but not limited to a proxy fight, litigation claims and any available Delaware statutory appraisal rights.”

A Dell spokesman said the company had no comment.

Under the buyout deal announced Tuesday, a group of investors led by Silver Lake and Michael Dell would acquire the company in a $24.4 billion deal, or $13.65 a share in cash.

Southeastern Asset Management said the firm “would have endorsed a transformative transaction that would have provided full and fair value to Dell’s public shareholders, including a leveraged recapitalization or a go-private type sale where current shareholders could elect to continue to participate in a new company with a public stub.”

Instead, it called the proposed deal “an effort to acquire Dell at a substantial discount to intrinsic value at the expense of public shareholders.”

In a valuation breakdown of Dell’s businesses that was included with its letter, Southeastern said it believes Dell to be worth at least $24 per share. “This obviously exceeds the $13.65 offer and does not even take into account Dell’s strong product distribution capability, especially in the small- to medium-size business space,” the letter read.

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