Here’s the text of Dell’s filing, which the vendor said was in “response to certain inquiries,” most likely referring to protests raised last week by Southeastern Asset Management, which holds 8.5 percent of Dell’s shares:
Reports surfaced late last week that Southeastern isn’t alone in pushing back on the Dell deal. As reported here and in other places, three of Dell’s largest investors also have joined in objecting to the price of the buyout--namely Harris Associates, Yacktman Asset Management and Pzena, which together command 3.3 percent of Dell’s outstanding stock--meaning 20 percent of the 20 biggest stakeholders aren’t crazy about the deal.
“In the course of its deliberations, the Special Committee of Dell’s Board considered an array of strategic alternatives. In addition to working through financial and capital allocation issues with its independent financial advisors, the Committee retained a prominent management consultant to help it assess the Company’s strategic position. 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.”
As for Southeastern, the reluctant quartet’s ringleader, reports vary on the average price it paid for its 8.5 percent of Dell from $16.90 per share to $20 per share, but no matter, at either of those prices the asset management firm stands to lose hundreds of millions of dollars in the $13.65 per share deal as it’s currently constituted. Accordingly, Southeastern is arguing that $24 per share is a suitable price if factoring in Dell’s financial services unit, recent acquisitions and various additional assets, while Pzena is stumping for $20 a share, according to reports.
Dell, which closed on Monday at $13.70, last traded in the rarified air above $24 at $25.08 on Aug. 11, 2008. In late January, soon after reports surfaced that a Dell private equity deal may be in the offing, Sanford Bernstein senior IT hardware research analyst A.M. (Toni) Sacconaghi Jr. suggested that the deal could be waylaid by Southeastern, noting the firm’s activist history.