updated 09:30 pm EST, Tue March 5, 2013
Breaking up company, returning overseas cash to investors suggested
Opposing Dell's bid to go private, Southeastern Asset Management has called for "straightforward information" from Dell in regards to its finances on behalf of Longleaf Partners Fund. The firm says that Dell executive silence about the deal during February earnings are leading to a bad deal for shareholders. Southeastern has suggested several alternatives to the plan which would be a better deal for shareholders, including the company broken up and the disparate business units sold individually -- similar to what Michael Dell proposed for Apple's fate in the late 90s.
Southeastern leads a coalition holding 14 percent of Dell shares, who have said that they will all vote against the buyout, which has been offered at $13.65 per share. T. Rowe Price has not thrown in with the coalition, but has opposed the bill publicly.
"Under the current buyout proposal, management and Silver Lake stand to receive all of the future upside, while denying shareholders -- who have paid to reposition the company -- the opportunity to reap the rewards of our investment," Southeastern said in its filing. Besides splitting up the company and selling the departments piecemeal, Southeastern proposes returning Dell's overseas cash reserve to shareholders instead of using it to fund the buyout at shareholder's expense.
Southeastern Asset Management will lose at least $825 million if the deal completes. Chief Executive of Southeastern, Mason Hawkins, 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. Hawkins believes Dell is worth $20 per share despite recent stock pricing.
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 said that she was personally voting against the deal -- as she, and apparently many of her colleagues, felt that the deal benefitted Michael Dell and the private investment companies involved at the expense of the shareholders.