Dell Inc., which last week agreed to be taken private, closed above the offer price for the first time since the announcement after the computer maker's largest outside shareholder said the proposed deal undervalues it.
Southeastern Asset Management on Feb. 8 sent a letter to Dell's board expressing its "extreme disappointment" with the buyout offer of $13.65 a share announced on Feb. 5. Based on an analysis included in the letter, Southeastern said Dell is worth about $24 a share. The investor holds a 8.4 percent stake in the PC maker and hired D.F. King & Co. for consulting and related services, according to a filing today.
Dell rose less than 1 percent to $13.70 at yesterday's close in New York, the highest price since May 2012. The buyout offer is 25 percent more than the closing price of $10.88 on Jan. 11, the last trading day before Bloomberg News reported the discussions to take the Round Rock, Texas-based company private. In German trading today, the stock traded at the equivalent of $13.72 as of 11:58 a.m. in Frankfurt.
Chief Executive Officer Michael Dell is seeking to take back majority control of the company he founded in 1984 with a $24.4 billion offer in conjunction with Silver Lake Management LLC. In the letter, Southeastern said Dell's business-computing acquisitions, along with its server and technology-services operations, are worth more than the offer.
"They're probably going to sweeten it a little bit," said Brian Marshall, an analyst at ISI Group in San Francisco, who has a neutral rating on Dell shares. "These deals aren't usually inked on the first offer."
Richard Pzena, founder of Pzena Investment Management, has also said he'll vote against the transaction. Pzena's firm held 12.7 million Dell shares, or 0.7 percent of the company, as of Dec. 31, according to data compiled by Bloomberg. Donald Yacktman of Yacktman Asset Management said that the transaction may not go through at the current price, and Harris Associates LP's William C. Nygren said Feb. 5 that he would create a "ruckus" if his firm were to find out that there were better alternatives than the deal that Dell's board agreed to.
David Frink, a spokesman for Dell, said in an e-mailed statement last week that the proposed deal "offers an attractive and immediate premium for stockholders and shifts the risks facing the business to the buyer group." A so-called "go-shop" period "provides stockholders an opportunity to determine if there are alternatives that are superior to the present offer," he said.
--Editors: Reed Stevenson, Jillian Ward
To contact the reporter on this story: Aaron Ricadela in San Francisco at aricadelabloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5bloomberg.net