Dell's largest investor opposes buyout as too low

Fri Feb 8, 2013 5:03pm EST
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By Poornima Gupta and Nadia Damouni

(Reuters) - Dell Inc's largest independent shareholder, Southeastern Asset Management, on Friday vowed to fight a $24.4 billion buyout of the No. 3 PC maker led by CEO Michael Dell, cementing opposition to what would be the largest buyout since the start of the financial crisis.

Southeastern's opposition to the deal, which Reuters first reported late on Thursday, sets up a potential battle with billionaire founder Dell and private equity firm Silver Lake, who are pushing a deal to take the company private at $13.65 a share.

Southeastern, run by activist investor Mason Hawkins and owner of 8.5 percent of Dell, including options, argues that the company is worth $24 a share if its financial services division, recent acquisitions and other assets were factored in.

With Southeastern's objection, shareholders representing 11 percent of the Dell shares not held by Michael Dell have now said they will vote against the deal, according to news reports. Billionaire Dell, who created the computer maker out of his college dorm room in 1984, holds a roughly 16 percent stake.

Dell shares reversed course and climbed into positive territory on Friday after the announcement, and closed up 0.74 percent at $13.63.

"We are writing to express our extreme disappointment regarding the proposed go-private transaction, which we believe grossly undervalues the Company," Hawkins and Chief Investment Officer Staley Cates wrote in a letter.

"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."

Representatives of Dell and Silver Lake declined to comment on Southeastern's statement.   Continued...

A man wipes the logo of the Dell IT firm at the CeBIT exhibition centre in Hannover February 28, 2010. REUTERS/Thomas Peter