Dell: Going Private Is Best Option for PC Maker
The firm said it would consider a proxy fight to make sure the deal doesn’t go through. With 8.5 percent of Dell’s shares, Southeastern Management is the company’s largest independent shareholder and carries some clout. Sources told Reuters Feb. 8 that a number of other shareholders—Harris Associates, Yacktman Asset Management and Pzena Investment Management—are supporting Southeastern Management’s decision to vote against the deal. Pzena Chairman Richard Pzena told Reuters a price tag for Dell should be about $20 per share. Combined, the three firms own about 3.3 percent of Dell shares. Other shareholders who have said they will oppose the deal include Alpine Capital Research—which holds about 2 million shares—and Schneider Capital Management, with its about 350,000 shares. Several law firms also said they were investigating the decision-making behind the deal.Michael Dell is also trying to assure customers that the deal will not slow the company’s progress or hurt its ability to invest. “We believe that our proposed new ownership will provide long-term support to help Dell innovate, invest for growth and accelerate our transformation strategy,” Dell said in the letter posted on the company’s Website. “We’ll have the flexibility to continue organic and inorganic investment and drive industry-leading innovation.” Less than an hour after Dell announced the deal Feb. 5, officials at Hewlett-Packard released a statement targeting Dell customers who might be unsettled about the buyout. “Dell has a very tough road ahead,” HP officials said in the statement. “The company faces an extended period of uncertainty and transition that will not be good for its customers. And with a significant debt load, Dell's ability to invest in new products and services will be extremely limited. Leveraged buyouts tend to leave existing customers and innovation at the curb. We believe Dell's customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity."
The $24.4 billion deal includes a 45-day “go shop” period where Dell’s special committee can entertain other offers. However, the termination fees of $180 million or $450 million make it unlikely that other offerings be made, according to some analysts.