Dell shareholder Southeastern Asset Management is attempting to delay the PC maker’s move to go private, after Michael Dell’s bid got approval from the board late last week.
On Friday, Southeastern, which owns more than eight percent of Dell shares, posted an open letter to fellow Dell shareholders. The investment firm urged shareholders not to sign anything that would push forward the Michael Dell bid while it worked with investor Carl Icahn "to advance superior alternatives” to the buyout proposal.
“We are a long-term investor in Dell and (like you) we care about our investment,” Southeastern wrote. “We urge you to refrain from signing or returning any proxy card voting for the management buyout proposal (or, for that matter, any proxy card sent to you by Dell). We, along with Icahn Enterprises, believe that substantially greater value can be realised for Dell stockholders than what is reflected in the management buyout proposal.”
However, Southeastern failed to put a timeline on its rival bid, simply stating that it would make a statement “in the near future”, after which time it hoped other shareholders would consult their financial advisors and also oppose the Dell buyout bid.
Earlier on Friday, Dell sent a letter to shareholders, asking them to formally back a buyout plan from co-founder Michael Dell.
The company said in a letter to shareholders that the $13.65 per share proposal marked the best option for the company's stockholders and would help to clear the way for an effort by Dell to go private as it works to rebuild its business.
The offer, backed by a combination of Michael Dell, Microsoft and equity firm Silver Lake Partners, would represent a 37 percent increase in share price for the ailing IT hardware giant.
“Our analysis led us to conclude unanimously that a sale to the Michael Dell/Silver Lake group for $13.65 per share is the best alternative available – in a challenging business environment it offers certainty and a very material premium over pre-announcement trading prices,” the board said in its letter to shareholders.
“It also shifts very substantial risks to the buying group – risks that in any leveraged recapitalisation would be retained by the stockholders and considerably magnified by leverage and the public nature of the resulting stub.”
The proposal is set to receive a shareholder vote on 18 July during a special meeting.
The recommendation is the latest in what has become a tumultuous road for Dell in its bid to go private. The company first announced its plan in February, outlining the $24.4bn deal, which would see the company pull itself from the stock market.
Since announcing the deal, however, some Dell shareholders have met the offer with resistance, most notably investor and activist Carl Icahn. Icahn has asked the company to consider other avenues, including an alternative buyout pattern and a possible merger deal with HP.
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