Dell Buyout Opposed by Investor

Story first appeared on USA Today -

Dell now faces a shareholder battle in opposition from its largest outside investor over its buyout agreement formed this week.

Michael Dell on Tuesday agreed to a $24.4 billion leveraged buyout of his namesake PC brand, the largest concession to date of a battered personal computer industry. Experts say Dell is in slow retreat from the low-margin PC business and needs to lever up to refocus its business.

Southeastern Asset Management, which holds roughly 8.5% of Dell's outstanding shares, has filed documents with the Securities and Exchange Commission in opposition to the deal. The major outside investor objects to the $13.65 per share offer to shareholders, saying that Dell's value should be set closer to $24 per share.

"This obviously exceeds the $13.65 offer and does not even take into account Dell's strong product distribution capability, especially in the small to medium size business space (SMB)," Southeastern Asset Management said in a statement.

A Dell spokesman declined to comment on the opposition to the deal.

CEO and founder Dell, who holds 14% of the company, has agreed to put in his ownership stake of the company plus cash in the deal that will keep him at the helm.

The deal's figure of $24.4 billion represents a 25% premium over Dell's closing share price January 11, the day before rumors emerged of it going private.

Private equity player Silver Lake Partners and MSD capital agreed to help fund the deal along with a $2 billion loan from Microsoft and debt financing from BofA Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets. The agreement allows for alternative proposals to be offered.

The PC industry is under heavy assault by tablets. Personal computer sales worldwide slipped 6.7% in the fourth quarter compared with a year ago, according to preliminary results from Gartner. That downturn comes as tablet sales worldwide grew 75% in the same period, according to early results from researcher IDC.