Opposition to Dell deal intensifies
One of the big questions in the Dell LBO drama is the extent to which other big shareholders will join Southeastern Asset Management in opposing the deal.
In a move that might be making Michael Dell just a tad nervous, another big shareholder has publicly criticized the deal. T. Rowe Price has officially announced its opposition. The mutual fund giant issued a statement from its CIO noting that, "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 Price ranks as the third largest shareholder of Dell, trailing only Michael Dell himself and Southeastern Asset Management, as noted by Forbes. One gets the feeling that the spigot is opening just a bit for critics of the LBO. And as more big names come out against the deal, the movement could easily feed on itself.
The reality here is that many funds have been invested in Dell for a long-time and would realize some significant capital losses at the offer price. Many big asset managers have a big decision to make. At the same time, the anti-deal movement will need to gain a lot of strength from here if it wants to overcome the No. 1 shareholder, the founder itself.
In related news, Southeastern Asset Management has hired D.F. King, signaling that a proxy battle may be one tactic it will pursue to kill the deal. At this point, the bankers have to be thinking about whether they can boost the value of the deal. One analyst suggests that the company may soon raise its bid to $15 a share from $13.65 a share.
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