Another major Dell shareholder opposes $24.4B sale
SAN FRANCISCO — A shareholder rebellion against Dell's proposed $24.4 billion sale to its founder and other investors is gaining more support, fueling a belief that the struggling personal computer maker will have to wrangle a higher price to get the deal done.
Mutual fund firm T. Rowe Price joined the opposition on Tuesday. T. Rowe Price and another shareholder, Southeastern Asset Management, believe that founder and CEO Michael Dell and the investment firm Silver Lake are being allowed to seize control and end Dell Inc.'s 25-year history as a publicly held company for too little money.
“We believe the proposed buyout does not reflect the value of Dell, and we do not intend to support the offer as put forward,” T. Rowe Price Chairman Brian Rogers said in a statement.
T. Rowe Price and Southeastern are the two largest independent shareholders and own nearly 13 percent of the company combined. Michael Dell has committed his 14 percent stake toward the deal, but he is the only investor to own more stock than either of the two.
Although Dell remains one of the world's largest technology companies, with $57 billion in annual revenue, it has become less attractive to investors as smartphones and tablet computers siphon sales away from PCs. To make matters worse, Dell has been losing market share to its rivals. The company once was the world's largest PC maker, but now ranks third behind Hewlett-Packard Co. and Lenovo Group.
Michael Dell believes it will be easier to accelerate Dell's expansion into more lucrative areas such as technology consulting and business software if the company doesn't have to cater to Wall Street's fixation on whether profits are rising from one quarter to the next.
The company, which is based in Round Rock, Texas, said it remains convinced that it is selling at a fair price, which represents a 25 percent premium from where the stock stood before word of the buyout negotiations leaked last month. During the talks, Dell's board said it also considered a wide range of other alternatives. The proposed price of $13.65 is more than 40 percent below Dell's stock price of roughly $24 six years ago when Dell returned for a second stint as CEO.
Southeastern, which came out against the proposed deal last week, argues that Dell is worth $23.72 per share, or about $42 billion. T. Rowe Price didn't provide an estimate of what it believes Dell is worth.
It's still unclear how other large Dell shareholders feel about the deal, but the opinions of Southeastern and T. Rowe Price seem likely to embolden others to join the resistance. Southeastern owns an 8.4 percent stake in Dell, according to a Tuesday regulatory filing that revised the size of its stake from 8.5 percent in documents submitted last week. T. Rowe Price owns a 4.4 percent stake in Dell, according to FactSet.
Michael Dell is contributing his holdings to the proposed sale, along with cash that will bring his total financial commitment to about $4.5 billion. The rest of the proposed deal's financing is being provided by Silver Lake and loans from Microsoft Corp. and an array of banks.
In a Tuesday research note, Jefferies analyst Peter Misek predicted the offer will have to be sweetened to $15 per share, or nearly $27 billion, to placate riled shareholders.
Dell's stock is trading above the offer, a sign that more investors are becoming convinced the bid will be raised. Dells shares gained 9 cents to close at $13.79 on Tuesday.
The door remains open for another suitor to emerge. Dell said it will accept other bids until late March.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Halliburton to close Indiana County office
- Supreme Court justices ream EPA for ignoring costs to meet air standards
- W.Pa. economy gains momentum as employers increase hiring
- Heinz executives to dominate post-merger management of Kraft Heinz Co.
- Consol again reworks offering for coal spinoff
- Drillers to submit electronic records on fracking chemicals to Pa. DEP
- Pending home sales in U.S. climb to 9-year high