By Aaron Pressman
Feb 12 Dell Inc's third-largest
shareholder, T. Rowe Price Group, on Tuesday joined a
growing number of investors putting pressure on Michael Dell and
his partner Silver Lake to sweeten their $24.4 billion buyout
offer for the PC maker.
"We believe the proposed buyout does not reflect the value
of Dell, and we do not intend to support the offer as put
forward," T. Rowe Chief Investment Officer Brian Rogers said in
The money manager, which declined further comment,
controlled 4.4 percent of Dell shares as of Sept. 30, according
to Thomson Reuters data.
The company has said it needs a majority of investors,
excluding Chief Executive Michael Dell's 14 percent stake, to
approve the transaction. With T. Rowe added to the list, at
least six investors with more than 18 percent of Dell shares,
excluding Dell's stake, have now said they oppose the deal.
T. Rowe is not typically known as an activist investor and
it is rare for the money manager to come out so publicly against
a deal. It joins Dell's second-largest shareholder, Southeastern
Asset Management with an 8.5 percent stake, in voicing
"You have such credible voices, voices that are highly
respected in the investment management community, saying that
the price doesn't make sense," said Don Phillips, president of
research at Morningstar in Chicago. "A very likely outcome is
that Dell is still going to go private, but a higher price
A spokesman for Dell declined to comment beyond their
previous statements. The company has said that its board had
considered many strategic options before opting to go private.
Dell had retained a management consultant to help assess its
position and concluded that the proposed all-cash deal was in
the best interests of stockholders, the company said in a
securities filing on Monday.
Michael Dell last week announced that he had struck a deal
to take Dell private, partnering with private equity firm Silver
Lake and Microsoft Corp. The goal is to facilitate
Dell's difficult transition from a commodity maker of computers
into a provider of services to enterprises as a private company,
away from Wall Street's scrutiny.
But since the deal was announced, a steady stream of
investors have said the $13.65 per share price was too low,
ranging from major holders like T. Rowe Price and Southeastern
to smaller firms such as Alpine Capital Research and Schneider
"We will be surprised if the final price is not meaningfully
higher than the current offering price," said Nicholas Tompras,
president of Alpine Capital Research in St Louis.
The firm will vote its 2 million shares against the current
Dell deal which "grossly under-values its numerous and varied
businesses," Tompras said.
Shares of Dell traded above the offer price at $13.80, up
0.7 percent on the day, after the T. Rowe Price announcement.
Several sources close to the Michael Dell-Silver Lake
consortium told Reuters on Friday that the buyers did not intend
to raise their offer price, which represents a 25 percent
premium to where the stock was trading before news of the deal
talks emerged in January.
The consortium is holding to the belief that information
contained in an upcoming proxy statement, when published, will
reveal how Dell's independent committee negotiated thoroughly
and explored all options, the people said.
Dell has now gone into a go-shop process, during which it
can solicit better offers. But opposing investors argue that
Michael Dell's involvement may deter other bidders from coming
Memphis-based Southeastern has offered several alternatives
that it said would produce a better outcome for public
shareholders. Dell could borrow money to make a major share
repurchase or break up the company and sell the units
separately, Southeastern said.