Dell Getting Shareholder Resistance to Buyout Deal

Some investors, including the company's largest independent shareholder, said the $24.4 billion price tag for Dell is too low.

Southeastern Management is the largest shareholder to oppose the plan, but not the only one. Nick Tompras, president of Alpine Capital Research, was quoted in a Reuters story Feb. 8 that his firm would vote its 2 million Dell shares against the deal.

"Let the fools sell low—don't make us all fools," Tompras said.

Arnie Schneider, president of Schneider Capital Management, which owned about 350,000 Dell shares in September, said that firm also would vote against the deal, Reuters reported.

The deal also is garnering attention from law firms that are investigating whether the deal undervalued the company. In a Feb. 5 statement, lawyers from the Briscoe Law Firm and Powers, Taylor LLP said their “investigation centers on whether Dell’s shareholders are receiving adequate compensation for their shares in the proposed going private deal, whether the transaction undervalues Dell’s stock, and whether Dell’s board attempted to obtain the highest share price for all shareholders prior to agreeing to the deal. Notably, at least one analyst with Yahoo! Finance has estimated that the true inherent value of Dell shares is as high as $16 per share.”

Lawyers with the New York City firm of Levi and Korsinsky also questioned the price of the deal, and said they were investigating.

The deal calls for a 45-day “go shop” period where the special committee appointed by the Dell board to handle the negotiations can entertain other offers. However, the termination fees of $180 million or $450 million make it unlikely that other offerings be made.

Sources also told Reuters that the group buying Dell hope shareholders will learn through regulatory filings of the various alternatives Dell officials and board members investigated before taking to take the company private—including leaving it as is and breaking off the PC business—and that there are no other options other than taking it private.