Dell (DELL) Buyout Fight Begins, Shareholder Claims Company Worth $24/Share

February 8, 2013 4:16 PM EST
On Tuesday, Michael Dell and Silver Lake Partners announced a $24.4 billion deal to take the company private in management-led leveraged buyout, partnering with Microsoft (Nasdaq: MSFT). The per share offer price was $13.65, a 25 percent premium to Dell's closing share price of $10.88 on Jan. 11, 2013, the last trading day before rumors of a possible going-private transaction were published. Unsurprisingly, Southeastern Asset Management, Dell's largest shareholder, excluding Michael Dell himself, is opposing to the deal.

In a letter to Dell's board of directors, Southeastern Asset Management chief Mason Hawkins said the going-private transaction grossly undervalues Dell, and it will not vote in favor of the transaction as currently structured. They also say they would oppose the proposed transaction using all available means, including but not limited to: a proxy fight, litigation claims, and any available Delaware statutory appraisal rights.

Additionally, Southeastern Asset Management calculates Dell’s value at $24 per share, and they are touting a leveraged recapitalization in lieu of the buyout that would facilitate the payment of a special dividend to public shareholders.

Southeastern Asset Management owns 8.5 percent of Dell’s shares, so they also have significant weight to throw around when it comes to approving the buyout.

Arbitrage traders, meanwhile, bid Dell's price higher today on hopes Silver Lake Partners will find a way to sweeten the deal and win over Southeastern Asset Management.

Dell ended Friday up 0.7 percent with momentum spilling into after-hours trading.

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