By Drew FitzGerald
Dell Inc.'s (DELL) largest independent shareholder Tuesday
accused the company of withholding information from investors in an
effort to take the company private, a proposal the shareholder
continues to oppose.
Southeastern Asset Management of Memphis, Tenn., repeated its
charge that the computer maker placed management's interests above
shareholders by backing a leveraged buyout lead by founder Michael
Dell that valued the company at $24.4 billion. The fund manager,
which holds 8.4% of Dell's common shares, attacked the February
proposal shortly after its announcement, calling the bid "grossly"
undervalued.
The fund Tuesday criticized Dell for declining to pass cash held
overseas to shareholders, as many companies do to avoid incurring
higher taxes, noting Dell and private-equity firm Silver Lake
Partners plan to reverse that stance to fund the buyout.
"A more equitable approach would have returned the cash to all
shareholders instead of using it to fund the proposed buyout at the
expense of other shareholders," the fund's general counsel said in
a letter filed with the U.S. Securities and Exchange
Commission.
A Dell spokesman wasn't immediately available for comment.
Longleaf Partners Fund, Southeastern's largest client, also
demanded access to shareholder information it could use to contact
other investors as it continues to fight the proposal.
Southeastern also criticized Dell for allegedly refusing to
comment on the proposed buyout or provide investors with certain
segment results from last year. The fund accused Dell's management
of reporting more recent results in a way that highlighted the
company's declining PC sales to spur a buyout.
Southeastern last month told Dell it opposed the deal "as
currently structured," suggesting instead that the company stay
public, raise $9 billion of new debt and pay stockholders a $12
per-share dividend partly with cash now held overseas.
Southern Asset Management manages about $34 billion in assets
and has a history of shaking up companies after their stock prices
fall--most recently Chesapeake Energy Corp. (CHK).
Dell needs an absolute majority of public shares to approve the
deal, not just a majority of those voting, so abstaining votes
don't help the buyout proposal.
Dell shares were up four cents at $14.05 early Tuesday, above
the buyout team's $13.65 per-share offer.
-Stephen Grocer contributed to this story.
Write to Drew FitzGerald at andrew.fitzgerald@dowjones.com
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