Dell Said to Plan
Shareholder Meetings to Assess LBO Demands
By Serena Saitto & Jeffrey McCracken - Feb 14, 2013 5:12 AM ET
Dell Inc. is setting up meetings with shareholders to assess their
demands for getting its $24.4 billion
buyout done and also preparing a public response to critics of the
deal, said people with knowledge of the situation.
Dell, chairman and chief executive officer of Dell Inc., speaks
during the Oracle OpenWorld 2011 conference in San Francisco on Oct.
4, 2011. Photographer: Tony Avelar/Bloomberg
Inc. logo is seen on display at the Mobile World Congress in
Barcelona. Photographer: Denis Doyle/Bloomberg
Silver Lake Management LLC are studying ways to address the concerns
raised by large
shareholders such as T. Rowe Price Group Inc., who said the
$13.65-a-share offer undervalues the company. While Silver Lake is opposed
to raising the price, one of the people said, the firm wants to meet with
shareholders to gauge whether they would expect a bump of more than $1 a
share or as little as 15 cents, said another person, who asked not to be
identified because the process is private.
In the largest leveraged
buyout since the financial crisis, founder
Michael Dell and Silver Lake announced Feb. 5 their agreement to take
Round Rock, Texas-based Dell private after the company lost almost a third
of its value in 2012 amid stiffening competition in mobile and cloud
computing. Their offer represents a 25 percent premium to Dell’s closing
price Jan. 11, the last trading day before Bloomberg News first reported
the buyout talks.
“I don’t think the current
offer will get the shareholder vote, especially given the fact that the
two largest shareholders have come out early and against,” said
Louis Meyer, an analyst at Oscar Gruss & Son Inc.
Dell dropped 0.1 percent
to the equivalent of $13.71 in German trading at 11:01 a.m. in Frankfurt.
Dell slipped less than 1 percent to $13.77 yesterday in New York, closing
above the buyout price for the third day in a row.
The buyers need approval
by a majority of shareholders, excluding Michael Dell, who owns 14 percent
of the shares. T. Rowe Price and Southeastern Asset Management together
own more than 10 percent of the stock and have said Dell is worth more
than its buyers have offered.
David Frink, a spokesman for Dell, declined to comment.
While Dell and Silver Lake
weren’t surprised by Southeastern’s response to the buyout, they were
caught off guard by how quickly T. Rowe Price and others voiced opposition
to the deal, one of the people familiar with the situation said. Dell and
Silver Lake are evaluating a public response because they want to halt
Southeastern’s momentum, said this person.
Evercore Partners Inc.,
which is also running a 45-day go- shop period to gauge whether there’s a
superior offer, hasn’t attracted interest from a potential counter-bidder,
said the people familiar. KKR & Co. and TPG Capital both conducted due
diligence on Dell and aren’t planning to pursue a counter-offer, said one
of these people.
A representative for KKR
didn’t respond to a message seeking comment left outside normal business
Lisa Baker, a spokeswoman for TPG at Owen Blicksilver Public Relations
Inc., declined to comment.
The buyers may sweeten
their offer by distributing a special dividend, said Gruss’s Meyer.
Opposing investors will first push for a higher price, he said. Failing
that, they will probably “press for some sort of recapitalization, such as
a special dividend.”
The company is supposed to
distribute at least one dividend, for 8 cents a share, before the summer,
when the deal is expected to close.
To contact the reporters
on this story:
Serena Saitto in New York at
Jeffrey McCracken at
contact the editors responsible for this story: Jeffrey McCracken at
email@example.com; Tom Giles at
©2013 BLOOMBERG L.P. ALL RIGHTS RESERVED.