TIN BOX MAKER Dell reported that its decision go private in a leveraged buyout is in the best interest of shareholders, according to a recent governmental filing.
In a Securities and Exchange Commission (SEC) filing Dell answered critics of its decision to buyout shareholders in an all-cash transaction. Some shareholders have recently said they think Dell undervalued the company's stock when it priced shares at $13.65.
"Dell's Board considered an array of strategic alternatives. In addition to working through financial and capital allocation issues with its independent financial advisors, the Committee retained a prominent management consultant to help it assess the company's strategic position," wrote Dell in the SEC filing.
"Based on that work, the Board concluded that the proposed all-cash transaction is in the best interests of stockholders. The transaction offers an attractive and immediate premium for stockholders and shifts the risks facing the business to the buyer group."
Dell's SEC filing follows opposition from investment firm Southeastern Asset Management. Southeastern, which owns some nine per cent of Dell stock, claims that shares should be valued at around $23.75.
That quote would represent a sharp increase in the value Dell claims is fair for shareholders. Dell offered its shareholders $13.65 per share, a value in line with reports that came out in the days leading up to the announcement to go private.
Southeastern outlined alternatives to the current buyout in a public letter to investors. Among the alternative options mentioned by the firm included an alternative for recapitalization.
"We reiterate our opposition to the proposed Silver Lake transaction and have serious concerns about the Board of Director's approval," wrote Southeastern in its letter.
"[It] penalizes shareholders by forcing them to exit at a significant discount to intrinsic value rather than adopting alternatives such as a recapitalization that would have better rewarded shareholders."
According to Southeastern's letter, the firm would consider entering a proxy fight or litigation if the deal as reported goes through without question. µ
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