Watch Out, Michael Dell — Shareholders are Angry

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By Aabha Rathee | February 13, 2013 8:18 AM EST

Wall St. Cheat Sheet

Michael Dell, founder and chief executive of the namesake company, secured a $13.65 per-share deal to take the computer manufacturer private. The valuation may be agreeable to Michael Dell, but many shareholders have found the terms of the deal to be unacceptable. In fact, they are fighting back.

Dell’s ( — Southeastern Asset Management, which holds an 8.44 percent stake in the company — wrote a letter to the board announcing that it would oppose the buyout plan in its current form when brought to a vote. In the firm’s estimation, the company’s worth is close to $24 per . According to The New York Times’ DealBook reporter Michael de la Merced, Southeastern said it would use a full range of tactics, including a proxy fight and lawsuits, to block what it termed an “ill-advised transaction.”

Southeastern disclosed in a on February 11 that it had if the deal is completed under the current terms.

Southeastern isn’t the only shareholder unhappy with the price. The voice money manager T. Rowe Price Group, which held a 4.4 percent stake in the company as of September 30, also announced that it would oppose the leveraged buyout offer proposed by and the private-equity firm Silver Lake.

“We believe the proposed buyout are expected to resist the buyout.

With an increasing number of shareholders speaking out against the buyout, Michael Dell should be concerned. Although he owns approximately 16 percent of the company’s , Dell’s offer for the computer manufacturer requires the approval of a majority of independent shareholders in order to be finalized.

In response the statements made by Southeastern and T. Rowe Price Group, Dell reiterated an argument it made on Friday. A spokesman for the company said that Dell’s board had examined several alternatives. “Based on that work, the board concluded that the proposed all-cash transaction is in the best interests of stockholders,” he said in the statement seen by the Times.

Shareholders will vote whether to approve the deal in several months.

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The article was first published by Wall St. Cheat Sheet and does not represent the views or opinions of International Business Times.

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