Michael Dell's $24.4 Billion Deal Hits a Potential Snag

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News Posted: Mon, Feb 11 2013 10:30 AM
Michael Dell, along with partners Silver Lake Management and Microsoft, are anxious to complete a takeover bid of the world's third largest PC maker, but not everyone involved is gung-ho to get it done. Southeastern Asset Management, Dell's biggest outside shareholder, plans to fight the acquisition on the basis that Mr. Dell's takeover price isn't high enough.

Michael Dell and his investment partners struck an agreement with Dell's board to acquire the company for $13.65 per share, valuing the company at $24.4 billion. However, Southeastern Asset Management wrote in a letter to the board that Dell is worth closer to $24 per share, The New York Times reports.

Dell via Flickr

Southeastern Asset Management called the current proposal an "ill-advised transaction" and has asked the board to look for other proposals, given that Dell has a 45-day window to solicit other bids. Barring a better offer, Southeastern Asset Management says it's ready to wage war via proxy fight and through lawsuits.

Dell has already started laying the groundwork in case things get nasty. The company on Monday said it consulted with advisers before accepting the buyout offers.

"Based on that work, the board concluded that the proposed all-cash transaction is in the best interests of stockholders," said David Frink, a spokesman for Dell. "The transaction offers an attractive and immediate premium for stockholders and shifts the risks facing the business to the buyer group."
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RWilliams replied on Mon, Feb 11 2013 12:01 PM

I'm no investor, but that takeover price did seem kind of mild. It was something like a minor 25% premium over the current share price, and no one ever plans on investing just for those kinds of small gains.

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