By Saabira Chaudhuri
Dell Inc. (DELL) defended its planned $24.4 billion leveraged
buyout by founder Michael Dell as shareholder opposition to the
deal grows, but emphasized the computer maker is actively
soliciting alternative deals.
The company said its special committee unanimously determined
after a process of more than five months that a sale would be the
best alternative for stockholders and added it "negotiated
aggressively" to ensure the best possible value.
The committee said it also considered modifying Dell's existing
business plan, conducting a leveraged recapitalization, changing
the dividend policy, and potentially selling all or parts of the
business. The per-share offer price of $13.65 marked a 37% premium
above the average price for the 90 days before rumors of a
potential deal emerged.
Still, the company emphasized Wednesday that its adviser
Evercore is actively soliciting potential alternative proposals as
part of a go-shop period that ends March 22 and it had insisted on
provisions, like a low break-up fee, to protect shareholders.
The comments comes a day after Dell's largest independent
shareholder accused the company of withholding information from
investors in an effort to take the company private, a proposal the
shareholder continues to oppose.
Southeastern Asset Management repeated its charge that the
computer maker placed management's interests above shareholders.
The fund manager, which holds 8.4% of Dell's common shares,
attacked the February proposal shortly after its announcement,
calling the bid "grossly" undervalued.
Southeastern also criticized Dell for allegedly refusing to
comment on the proposed buyout or provide investors with certain
segment results from last year. The fund accused Dell's management
of reporting more recent results in a way that highlighted the
company's declining PC sales to spur a buyout.
Last month, T. Rowe Price Group Inc. also said it wouldn't
support Mr. Dell's bid at the current offer price.
Dell needs an absolute majority of public shares to approve the
deal, not just a majority of those voting, so abstaining votes
don't help the buyout proposal.
Dell has been hit harder than most competitors by the slowdown
in PC sales. In the Feb. 1 quarter, its revenue from PCs fell 20%
from a year earlier to $6.9 billion. The machines account for 48%
of Dell's revenue.
Dell's shares edged down by four cents to $14.03 in recent
premarket trading. The stock has dropped 16% in the past 12
months.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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