March 05--The biggest outside shareholder of Dell Inc. disclosed Tuesday that it is seeking extensive shareholder information from the Round Rock company as it continues to fight against Dell's acceptance of a $24.4 billion buyout offer from an investment group led by company founder and CEO Michael Dell.
Memphis-based Southeastern Capital Management disclosed in a regulatory filing that it is demanding a complete list of Dell shareholders with addresses to be turned over to D.F. King & Co., a leading proxy solicitation company, that it has hired.
Southeastern owns or controls 146.6 million Dell shares, or 8.4 percent of the company's outstanding stock.
It said in a filing in February that it intends to fight the proposed Dell buyout through a variety of methods.
The latest filing comes two weeks after media reports that Dell Inc.'s management would meet with some major shareholders to discuss the buyout.
Southeastern is among a number of large Dell shareholders that have expressed opposition to the Dell offer of $13.65 a share. Another shareholder that has expressed opposition to the offer is T. Rowe Price Group.
Dell Inc. on Feb. 5 disclosed that its board had agreed to the proposed buyout by Michael Dell in partnership with Silver Lake Partners of California. Microsoft Corp., Dell's major software supplier, has agreed to lend $2 billion to support the buyout. The company is presently engaged in the "go-shop
In a letter to Dell's board, Southeastern leveled three criticisms of the deal:
-- It noted that the buyout group proposes to use some of Dell Inc.'s overseas cash and investments to support the deal. A better use for the cash, Southeastern said, would be to give existing shareholders a "special dividend" of $12 a share by raising $9 billion in new debt backed by overseas assets. The proposed use of the company's cash for the buyout contradicts its long-standing policy of not distributing cash to shareholders because "repatriating" that could would subject it to U.S. income tax.
-- It disagrees with the company's refusal to comment on the proposed buyout and to provide more detailed operating results of its various business segments. "We believe management is intentionally emphasizing declining (personal computer) sales in order to justify its inadequate buyout price." the letter said.
-- It disagrees with the company's assessment of the buyout as a transfer "of the risk of the business to the buyout group." Instead, Southeastern says it considers the proposed deal as a transfer "of the opportunity of the business to the buyout group. Management knows the company better than anyone and clearly sees Dell's substantial unrealized value. Under the current buyout proposal, management and Silver Lake stand to receive all the future upside while denying shareholders, who have paid to reposition the company, the opportunity to reap the rewards of our investment."
In a previous letter to the board, Southeastern Asset Management said "We retain and intent to avail ourselves of all options at our disposal to oppose the proposed transaction."
Dell Inc. said in a statement that it will review the Southeastern Asset Management request "and respond in a timely fashion."
Dell's stock price closed above $14.07 a share Tuesday, up 7 cents.