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MENAFN - Arab News - 12/02/2013

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(MENAFN - Arab News) Dell is trying to reassure shareholders about its proposed 24.4 billion acquisition by a group led by its founder, saying it considered a number of strategic options before agreeing to the deal.

Dell Inc. laid out the advantages of the transaction in a regulatory filing, a few days after a major shareholder ridiculed the buyout as a rotten deal that undervalues the business.

The company said the deal "shifts the risks facing the business to the buyer group" and allows time for alternate bids.

Dell says shareholders will see if there are superior options available.
The computer company says that it determined with independent advisers that the cash bid by a group led by founder and CEO Michael Dell was in the best interests of stockholders.

An investment firm claiming to be the largest outside shareholder in Dell said earlier the proposal to take the firm private for 24.4 billion "grossly undervalues" the computer maker.

Southeastern Asset Management, which claims to hold 8.5 percent of Dell shares on behalf of clients, said it would fight the proposal and noted its objections to the deal in a letter to the board of directors, also filed with US securities regulators.

"We are writing to express our extreme disappointment regarding the proposed go-private transaction, which we believe grossly undervalues the company," the letter said.

"We will not vote in favor of the proposed transaction as currently structured.
"We retain and intend to avail ourselves of all options at our disposal to oppose the proposed transaction, including but not limited to a proxy fight, litigation claims and any available Delaware statutory appraisal rights."
Dell unveiled its plan to go private in a 24.4 billion deal, giving founder Michael Dell a chance to reshape the former number one PC maker away from the spotlight of Wall Street.

The company said it had signed "a definitive" agreement to give shareholders 13.65 per share in cash - a premium of 25 percent over Dell's closing share price on January 11, before reports of the deal circulated.

The move, which would delist the company from stock markets, could ease some pressure on Dell, which is cash-rich but has seen profits slump, as it tries to reduce dependence on the slumping market for personal computers.
The plan is subject to several conditions, including a vote of unaffiliated stockholders.

The letter from Southeastern said the deal "represents an opportunistically timed bid to take the company private at a valuation far below Dell's intrinsic value."

Southeastern said the value of Dell's assets and cash on hand suggests "a total corporate value approaching 24 per share" without taking into account Dell's growth prospects.

"By any objective measure, (the buyout offer) is woefully inadequate," the letter said.

The buyout deal calls for a "go shop" period to allow shareholders to seek a better offer.

Board members could implement a different plan, including a "Dutch auction" that would allow shareholders to sell back their stock at various prices, according to the letter.

It said another possibility that has not been considered would be to sell some of Dell's business units separately.

"We are concerned that given the participation of Michael Dell in this transaction, that a traditional go shop process is not sufficient to ensure that the company receives superior offers," the letter said.

The buyout plan also calls for a 2 billion loan from Microsoft along with financing from by Bank of America-Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets.

Analysts have said the deal may give the company a chance to regain some footing in a market in which smartphones and tablets are overtaking laptop and desktop computers.

 






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