Southeastern Asset Management, the largest outside shareholder in Dell, has accused the computer maker of withholding data to justify an ‘inadequate’ buyout offer and demanded a list of shareholders’ names to better co-ordinate its opposition to a proposed $24.4 bn buyout by the company’s founder and another shareholder.
The US mutual fund says the buyout offer of $13.65 per share announced by Dell founder Michael Dell and Silver Lake Management undervalues the company by more than $10 per share, and is demanding a more detailed breakdown of parts of the company’s 2012 earnings statement.
‘We reiterate our opposition to the proposed go-private transaction, as well as our deep disappointment with the board of directors’ failure to implement a transaction that would maximize shareholder value and be more beneficial to all shareholders,’ Southeastern Asset Management’s CEO Mason Hawkins and fund president Staley Cates write in a filing to the SEC.
‘The board of directors appears to have dismissed better alternatives for public owners and selected a transaction ‒ publicly derided by shareholders as opportunistic and grossly undervalued ‒ that favors management.’
Southeastern, which owns 8.4 percent of Dell stock, filed a demand with the SEC for a full list of Dell shareholders, along with contact details and the number of shares owned, saying it plans to discuss the buyout offer with other shareholders. The fund has also demanded a detailed breakdown of the company’s 2012 product segment results, stating: ‘We believe management is intentionally emphasizing declining PC sales in order to justify its inadequate buyout price.’
Southeastern, which estimates that Dell is worth about $24 a share, also complains in the filing that Dell intends to use funds from overseas to assist in the buyout after earlier saying it wouldn’t distribute the cash to shareholders as it was ‘trapped’ overseas ‘due to the tax Dell would incur for repatriating it.’
‘A more equitable approach would have returned the cash to all shareholders instead of using it to fund the proposed buyout at the expense of other shareholders,’ Southeastern says. ‘Instead of agreeing to a proposed go-private transaction that grossly undervalues the company, the board of directors could have paid all shareholders a special dividend of $12 per share.’
Dell, which says it will consider Southeastern’s request, is to hold a special shareholder meeting at the end of June on the buyout proposed by Michael Dell and mutual fund Silver Lake, the computer maker’s second-biggest outside shareholder.
