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Influential Shareholders Oppose Dell Buyout

It's looking more like the leveraged buyout of Dell for $24.4 billion is not a fait accompli -- not that it was ever a sure thing.

When announcing last week's unprecedented agreement for Michael Dell to buy out the company he founded with an investor group led by Silver Lake Partners, key financial institutions and a $2 billion loan from Microsoft, they left the window open for 45 days to consider any better offers if they were to come along. The prevailing belief last week suggested that wasn't likely.

That may still be the case but with key investors opposing the deal, they may have to sweeten their offer or the LBO could be on ice. Dell's largest outside shareholder Southwest Asset Management, which owns nearly 8.5 percent of the computer giant, last Friday kicked off the opposition to the deal, saying it "grossly undervalues the company."

In a letter to Dell's Board also filed with the Security and Exchange Commission in an SC 13D filing, Southwest Asset Management not only stated it would vote against the deal but said it wouldn't rule out a proxy fight or litigation. The chorus has grown louder this week with Yackrman Asset Management, Pzena Asset Management and Harris Associates speaking out against the deal.

The latest shoe dropped yesterday when mutual fund giant T. Rowe Price, which holds 4.4 percent of Dell's shares, said it opposed the deal. "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 and chief investment officer Brian Rogers said in an e-mailed statement.

The current opposition amounts to 15 percent of all shares, though in order to nix the deal, 42 percent would need to vote against it, The Wall Street Journal reported.

Dell has predictably kept mum on the matter, though reports say Silver Lake and Michael Dell have no intentions to raise their offer. We'll see if more shareholders step up.

Posted by Jeffrey Schwartz on 02/13/2013 at 1:15 PM


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