Dell buyout opposition grows, T. Rowe joins the mutiny

As Dell's second-largest investor lets their thoughts be known, Dell's $24.4bn buyout is looking rocky.
Written by Charlie Osborne, Contributing Writer
dell_ buyout investor t rowe shareholder mutiny

Dell's second largest investor, T.Rowe Price Group, has joined Southeastern Asset Management in dissent over Dell's plans to go private for $24.4 billion.

Last week, Dell's largest independent investor, Southeastern Asset Management, was "disturbed" by the apparent undervaluing of one of the world's largest PC makers, according to sources close to the situation and a letter which expressed "extreme disappointment" concerning the buyout price.

Now, the second largest investor, T.Rowe Price Group, has said it will not back the $13.65-a-share offer either, according to Bloomberg. In an emailed statement, T. Rowe Price Chairman Brian Rogers said:

"We believe the proposed buyout does not reflect the value of Dell and we do not intend to support the offer as put forward."

In other words, the deal may have to be sweetened to try and get investors on board. Without the approval of current investors -- of which resistant parties hold over 10 percent of stock -- with the exception of founder and CEO Michael Dell, the deal cannot go through. It is likely Dell will still go private, but a higher price may have to be laid on the table.

In addition to Southeastern Asset Management and T.Rowe, Pzena Investment Management has also stated it would not support the buyout at its current transaction price. Southeastern holds 8.4 percent in shares, T.Rowe 4.4 percent according to Thompson Reuters data, and Pzena holds 0.7 percent. However, now the latest dissenting voice has spoken, this means a minimum of six investors that hold over 18 percent of Dell oppose the deal.

One investor has already gone a step further. Catherine Christner filed a suit with Delaware Chancery Court last week, accusing Dell management of "selling Dell on the cheap," and of ignoring their legal obligations to investing parties.

Michael Dell, who has led the deal with private equity firm Silver Lake Management, holds 14 percent of the firm. The founder is trying to claw back majority control of the PC maker, going private in order to blind the eyes of Wall Street and cease annual and quarterly statement releases, as well as gaining control over altering business strategy without answering to shareholders.

Some investors have stated that $20 per share, rather than $13.65, would have been a more reasonable offer to take the company private.

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