Dell management ponders moves, reaches out to shareholders


Is Michael Dell feeling some heat over the proposed leveraged buyout of his eponymous company?

The stock price is hovering just above the offer price of $13.64 per share, as more shareholders assess the likelihood that a stronger bid might materialize. While some analysts expect the deal as proposed to be consummated, upset shareholders are not about to give up now.

In what the Financial Times calls a "pre-emptive" move, Dell management has filed a justification of the deal with the SEC. "Companies usually wait longer to explain the process that has led to a deal proposal, outlining their thinking in fuller proxy filings lodged closer to a shareholder vote," it noted.

The filing, which might have been designed to stave off litigation, confirms that the Dell invited two other private equity companies to also make offers, with one "getting as far as a lodging a preliminary bid."

The names of those firms weren't identified. "The filing also revealed that Mr Dell had agreed to accept a slightly lower valuation on his own shares during last-minute wrangling over the buyout price, so that Silver Lake would be able to increase the offer to other shareholders. Mr Dell's stake in the company would be rolled over at a price of $13.36 a share, 2 per cent below the buyout price for other shareholders."

Still, it's unclear whether management will sweeten its offer. The next step might be for management to undertake a more personalized lobbying effort. Bloomberg reports that management is setting up meetings with large shareholders to assess their views of the deal and address concerns. In the end, management may have to hike its offer, but perhaps not dramatically.  

For more:
- here's the FT article
- here's the Bloomberg article

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