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Dell SEC filing reveals buildup process for buyout deal

updated 03:50 pm EST, Mon February 11, 2013

Shareholder concern about deal expands to more investment firms

In a filing with the Securities and Exchange Commission discussing its controversial $24.4 billion plan to go private, Dell claims that it "considered an array of strategic alternatives" prior to the decision. Additionally, the company hired a "prominent management consultant" to build the best plan for Dell's future. Regulatory agencies must approve the deal, and shareholders must vote to sell, with a simple majority required. Several major shareholders have expressed reservations about the deal, or outright said that they would vote against the offer.

Dell wrote in the filing that "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. In addition, and importantly, the go-shop process provides stockholders an opportunity to determine if there are alternatives that are superior to the present offer."

According to reports, Southeastern Asset Management, Harris Associates, Pzena Investment Management, and Yacktman Asset Management are all opposed to the deal, and feel that the share price should top $20. The four companies combined own more than 11 percent of the company's shares, with another 20 percent owned by new shareholders who invested since rumors started spreading about the effort.

Southeastern Asset Management is willing to start a proxy fight or file a lawsuit to stop Dell's privatization to prevent Southeastern from losing over $600 million dollars in the transaction. Chief Executive of Southeastern Mason Hawkins is likely to take any objections public. He has railed against mismanaged companies that his company has held stock in previously, including CEO misconduct with Cheseapeake Energy Corporation in 2012, and Olympus Corp's accounting scandal in 2011.

Electronista spoke with a private shareholder of Dell who owns just over 12,000 shares. She told us that she was receiving unsolicited emails and flyers through the mail petitioning her to vote either for or against the deal, with the majority of the mailings advocating against accepting the offer. She told us that she was voting against the deal, as she felt that the deal benefitted Michael Dell and the private investment companies involved at the expense of the shareholders.

By Electronista Staff
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