--Southeastern says no "sound reasoning" why Dell should go
private
--Investment fund calls two other offers superior to Michael
Dell buyout
--Southeastern has said it would vote against the deal
By Ben Fox Rubin
Southeastern Asset Management, Dell Inc.'s (DELL) largest
independent shareholder, said the struggling PC-maker failed to
make a convincing case in its proxy filing for shareholders to
accept a $24.4 billion buyout offer from founder and CEO Michael
Dell and Silver Lake Partners.
Southeastern, which says it owns 8.4% of Dell's shares, said
Dell's filing contains no "sound reasoning for why, at this stage
in the transformation, the company needs to be taken private." It
added the proxy statement contains only one page devoted to Mr.
Dell's plans for the company following the transaction.
In February, Dell struck a deal to take itself private, with
Michael Dell and Silver Lake offering $13.65 in cash to
shareholders.
Southeastern, a Memphis, Tenn. investment fund that manages $33
billion in assets, and other shareholders have spoken out against
the offer, with Southeastern arguing that the transaction "grossly
undervalues" Dell. Southeastern is listed as Dell's second-largest
shareholder, after Michael Dell, according to FactSet.
A representative from Dell wasn't immediately available for
comment.
"For shareholders trying to decide whether to support the
transaction, the company's suspension of earnings guidance and
extremely limited discussion of the company's future plans will
make it difficult to make an informed choice," Southeastern said in
an open letter to a Dell special committee.
It added that two alternative proposals from Blackstone Group LP
(BX) and activist investor Carl Icahn were both superior to the
Michael Dell and Silver Lake offer.
Mr. Icahn, who holds 4.6% of Dell, and Blackstone both submitted
preliminary proposals during that go-shop period that the special
committee has said could be considered superior to the Silver Lake
offer. Blackstone offered at least $14.25 a share to buy all of
Dell, though it will allow a certain number of shareholders to
continue to hold shares if the holders want to. Mr. Icahn later
said he would also consider working with Blackstone on their
deal.
Southeastern said Tuesday that those two proposals were superior
primarily because they offer shareholders the opportunity to remain
owners of Dell while also offering a higher cash price to
stockholders who chose to exit their investment.
Dell, once the world's largest personal-computer maker, has
largely been sidelined as tablets and smartphones became the more
popular devices and PC sales shrank. In recent years, the company
has looked to move beyond its core PC business and expand into more
lucrative and high-margin businesses. To offset the slumping PC
business, Dell has been on an acquisition binge, adding a variety
of software, storage and networking tools.
In February, the company said its fiscal fourth-quarter earnings
fell 31% as it recorded double-digit revenue declines from its
personal computer and mobility segments, marking five straight
quarters of lower profits.
Shares were up a penny at $14.21. The stock is up 40% so far
this year.
Write to Ben Fox Rubin at ben.rubin@dowjones.com
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