One of the most vocal critics of Dell’s proposed $24.4 billion sale to its founder has clearly not been swayed by the argument for the buyout made in the company’s recent proxy statement.
Southeastern Asset management says that two preliminary proposals â€" from the Blackstone Group and Carl C. Icahn â€" are superior to the $13.65-a-share offer from Michael S. Dell and the private equity firm Silver Lake.
In an open letter to the special committee of the Dell board that has overseen the sale process, the investment firm â€" the biggest Dell shareholder other than Mr. Dell â€" says that the proxy statement “fails to make a case for shareholders to accept†the buyout offer.
The investment firm notes that under a stock buyback program over the last two years, Dell has repurchased 224 million shares at an average price of more than $15.25 a share.
The proxy statement, filed on March 29, showed that advisers to Dell directors spoke to 71 potential bidders in an effort to find an alternative to the buyout offer. Only two preliminary bidders emerged: Blackstone with an offer of more than $14.25 a share and Mr. Icahn, with an offer of $15 a share. Neither offer, however, is for the entire company.
Southeastern said in its letter on Tuesday that it views these proposals as superior “primarily because each offers shareholders the opportunity to remain owners of Dell while also offering a higher cash price to owners who choose to exit their investment.â€
The letter faults the proxy statement for not making a compelling argument for taking the company private. It writes:
In the entire proxy statement, we found only one page (page 82) devoted to Mr. Dell’s plans for the company following the transaction. That single page is consistent with the company’s prior public statements, and nothing about these plans requires that the company be private.
In fact, in an interview with ZDNet two weeks ago, John Swainson , head of Dell’s software unit, essentially confirmed that it doesn’t matter whether Dell is public or private. He said, “the corporate structure of Dell doesn’t make a difference on how customers interact with our products or how we develop or sell them.†We note that many companies, including I.B.M., were able to successfully transform their businesses as public companies.
