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Big investors hold out on Dell

Michael J de la Merced, NYT  New York, February 13, 2013
First Published: 21:06 IST(13/2/2013) | Last Updated: 21:08 IST(13/2/2013)

Michael S Dell’s plan to take the computer maker private for $24.4 billion is the biggest leveraged buyout since the financial crisis. It is also quickly becoming one of the biggest deals in years to face a shareholder uprising.


The opposition to Dell’s buyout effort now includes the mutual fund giant T Rowe Price, which on Tuesday said that it opposed the offer at its current price of $13.65 a share.

“We believe the proposed buyout does not reflect the value of Dell and we do not intend to support the offer as put forward,” Brian C Rogers, T Rowe Price’s chief investment officer, said.

And Southeastern Asset Management, an investment firm, stepped up its campaign against the Dell takeover bid. The asset manager disclosed on Tuesday that it had hired DF King & Company, a proxy solicitation firm, in what may be the first step toward a fight against Dell’s board.

The moves by the two shareholders — the biggest holders of Dell stock outside of Dell himself — signal growing discontent with the transaction. While Dell’s founder controls about 16% of the PC maker’s stock, his offer requires the assent of a majority of shareholders excluding his stake.

Together, Southeastern and T Rowe Price control nearly 13% of Dell’s shares.

Since the deal was announced, Dell’s shareholder base has changed. Some 20% of shares are now held by hedge funds betting on the buyout’s prospects, the investment bank Jefferies estimates. Some of these firms may now be wagering that Dell and his partners will be for-ced to sweeten their offer, while others are inclined to reap a quick payout.

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