Dell tries to face down shareholder revolt on deal to go private

Dell management board has rebuffed accusations that the $24.4bn deal it agreed to go private substantially undervalues the firm.

In a Securities and Exchange Commission (SEC) filing, Dell answered critics of its decision to buyout investors in an all-cash transaction. Some shareholders had complained that the price of $13.65 per share was too low.

Prior to the deal, Dell had established a special committee to evaluate all possible options to the firm, charged with developing a plan to deliver most value to its shareholders, Dell said in its SEC filing.

"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."

Dell's filing comes following opposition from investment firm Southeastern Asset Management. Southeastern, who owned nine percent of Dell stock, claims that shares should be valued around $23.75.

That quote would represent a sharp increase in the value Dell claims is fair for shareholders. 

Southeastern outlined alternatives to the current buyout in a public letter to investors. Among the alternative options petitioned by the firm included an alternative for recapitalisation - a process of adjusting a firm's ratio of debt to equity intended to stabilise its stock price.

"We reiterate our opposition to the proposed Silver Lake transaction and have serious concerns about the Board of Director's approval," wrote Southeastern.

"[It] penalises shareholders by forcing them to exit at a significant discount to intrinsic value rather than adopting alternatives such as a recapitalisation that would have better rewarded shareholders."

According to Southeastern's letter, the firm would consider entering a proxy fight or litigation if the deal as reported goes through without changes. However, it is yet to be seen if Southeastern could drum up enough support for a proxy battle.