Dell Faces Opposition to Privatization Plan

Large Shareholder Wants to Get More Money for Dell’s Stock

by Anton Shilov
02/11/2013 | 11:58 PM

The group of investors led by Michael Dell is facing a strong opposition to the plan to take the PC maker private. Southeastern Asset Management, the holder of an 8.5% percent stake in Dell, has sent the company a letter, claiming that the $13.65 a share is too low price for the company’s stock and that the owner wants no less than $24 a share. The investor is not alone.


“The price is completely out of proportion to what’s reasonable. Southeastern laid out the case brilliantly; we think $24 a share is fair, said Richard Pzena, founder of Pzena Investment Management, which owns Dell stock, reports Bloomberg news-agency.

Under the terms of the agreement, Dell stockholders will receive $13.65 in cash for each share of Dell common stock they hold, in a transaction valued at approximately $24.4 billion. The price represents a premium of 25% over Dell’s closing share price of $10.88 on January 11, 2013, the last trading day before rumors of a possible going-private transaction were first published; a premium of approximately 35% over Dell’s enterprise value as of Jan. 11, 2013; and a premium of approximately 37% over the average closing share price during the previous 90 calendar days ending Jan. 11, 2013. The buyers will acquire for cash all of the outstanding shares of Dell not held by Mr. Dell and certain other members of management.

The merger agreement provides for a so-called “go-shop” period, during which the special committee – with the assistance of Evercore Partners – will actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals. The initial go-shop period is 45 days.

Keeping in mind that the market of personal computers is not in its best ever condition and it is widely believed that companies like Dell, HP, Microsoft and others have a lot of hidden value, it is logical for different shareholders to demand higher price for their stock.