MAJOR DELL SHAREHOLDER Southeastern Asset Management has written a scathing open letter in which it urges Dell's shareholders not to agree to the leveraged buyout plan.
Michael Dell's attempt to pull off a leveraged buyout to take the company private has polarised opinion. Now the single largest independent Dell shareholder, Southeastern Asset Management has issued an open letter urging fellow shareholders not to accept the leveraged buyout offer put forward by CEO Michael Dell and Silver Lake Partners at $13.65 a share.
Southeastern Asset Management said that Michael Dell wants to deal at $13.65 because he wants to buy the shares for himself. According to the firm, Dell had been repurchasing the firm's shares at over $15.25 and Southeastern claims, "The same Board that was confident with Dell buying its shares for $15.25 is now attempting to convince all shareholders that Dell's business is in such dire straits that they should take $13.65 and exit their investments."
Southeastern said Dell's proxy statement regarding the leveraged buyout offered no reason why the firm needs to be taken private in order to transform its business. The firm said other companies, citing IBM as an example, were able to transform their businesses without having to go private, and said Michael Dell "would not be participating in the proposed go-private transaction if he did not believe in the Company's future upside and his ability to execute the transformation of the business".
Southeastern implied that shareholders are being shortchanged to quickly close a deal, and the firm is unhappy with the return on its investment as a shareholder that the Silver Lake deal represents. Southeastern called for Dell's Special Committee to consider alternative proposals put forward in good faith.
The Silver Lake deal has yet to receive shareholder approval and, judging by the public posturing of some high profile shareholders, it looks like the buyout might become a protracted and messy affair. µ