The Oakmark Funds, a group of mutual funds that were one of Dell
Inc.'s larger shareholders, sold their stake after Blackstone Group
LP withdrew its potential bid for the company, Oakmark said
Wednesday.
A "potential acquirer with access to non-public information
decided to end its quest to acquire Dell at a higher price. Since
they had information we didn't, we believed it was prudent to
assume they might be right. So we sold our stock and will put the
proceeds into other stocks that we are more confident are
undervalued," said Bill Nygren, co-portfolio manager of the Oakmark
Fund, Oakmark Select Fund and Oakmark Global Select Fund, in a
statement published Wednesday morning.
Blackstone had said it was working on a bid to rival Silver Lake
Partners and Michael Dell's $13.65-a-share offer to take Dell
private. But it decided to end its pursuit of Dell last week,
citing an "unprecedented" decline in the company's PC sales, along
with its "rapidly eroding financial profile."
The Oakmark funds together owned about 24.5 million Dell shares
at the end of the first quarter, according a company spokesman, or
about 1.4% of Dell's shares outstanding. The shares were held in
the name of Harris Associates LP, adviser to the Oakmark funds.
Harris was Dell's seventh-largest shareholder as of the end of
the first quarter, according to FactSet, though that position may
have changed due to trading in Dell stock. Merger arbitrage traders
and activist investors, including Carl Icahn, have been buying Dell
shares since the deal was announced.
"Our numbers suggested Dell should be worth a premium to the
$13.65 offer from management," Mr. Nygren said.
But, he said, "we were surprised and disappointed when, after
extensive due diligence of non-public information, Blackstone said
that it was alarmed by Dell's rapidly deteriorating financial
situation."
Dell shares were trading up 15 cents Wednesday to $13.24, below
the Silver Lake deal price.
Write to Telis Demos at Telis.Demos@wsj.com
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