Arik Hesseldahl

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Major Dell Shareholder Urges Other Investors to Abstain in Go-Private Vote

DellatCESSoutheastern Asset Management, the investment firm that is the largest outside shareholder in struggling computer maker Dell, today urged other shareholders not to participate in a coming proxy vote over a plan to take the company private.

Southeastern owns about 8 percent of Dell’s outstanding equity and has teamed up with activist investor Carl Icahn, who owns a little less than 5 percent, to oppose the $24.4 billion leveraged buyout proposed by CEO Michael Dell and private equity firm Silver Lake Partners. That deal values Dell at $13.65 a share.

In an open letter, Southeastern urged shareholders to withhold their votes entirely. This is a key tactic because in the way proxy votes work, a non-vote is essentially equal to a vote against the buyout.

Certainly there will be a large number of people who own Dell shares directly who will receive a proxy card in the mail and promptly ignore it. But they don’t matter nearly as much as the large institutional shareholders, like, say, T. Rowe Price, which has previously said it opposes the buyout proposal and which owns about 4 percent of Dell shares.

Every non-vote and no vote is going to count. Under the rules of the proxy vote, Michael Dell, who controls about 16 percent of the company’s shares, and other internal shareholders can’t participate in the vote. It’s not close yet, but if more institutional shops come out against the buyout, it could start to look like a contest.

Southeastern’s letter came on the same day Dell published its final proxy materials and scheduled the vote on the deal for July 18.

Here’s the text of the Southeastern letter.

Dear Fellow Dell Stockholder:

Earlier today, Dell Inc. announced that it has filed definitive proxy materials with the Securities and Exchange Commission soliciting your vote for a proposed transaction in which Dell would be taken private at $13.65 per share in a management buyout sponsored by Michael Dell and his partner, a private equity firm called Silver Lake Partners (the “Management Buyout Proposal”).  Southeastern Asset Management, Inc. beneficially owns more than 8% of the outstanding shares of Dell, which makes us the single largest independent investor in Dell.  We are a long-term investor in Dell and (like you) we care about our investment.  We urge you to refrain from signing or returning any proxy card voting for the Management Buyout Proposal (or, for that matter, any proxy card sent to you by Dell).

We, along with Icahn Enterprises L.P., believe that substantially greater value can be realized for Dell stockholders than what is reflected in the Management Buyout Proposal.  In the near future, we will make our own proxy statement available to stockholders. 

After you have received and reviewed our proxy statement, together with the proxy statement sent to you by the board of directors of Dell, we will ask you to consult with your financial advisor and join with us in opposing the Management Buyout Proposal.  Until then, we urge you to refrain from signing or returning any proxy card voting for the Management Buyout Proposal (or, for that matter, any proxy card sent to you by Dell).

In our efforts to advance superior alternatives to the Management Buyout Proposal for the benefit of all stockholders, Southeastern has agreed to work with Icahn Enterprises L.P. and certain of its affiliates solely for the purposes of promoting the proposals contained in our May 9, 2013, letter to the Board of Directors of Dell, including urging stockholders to vote against the Management Buyout Proposal.

If you have any questions, please contact D.F. King & Co., Inc., which is assisting us in connection with our opposition to the Management Buyout Proposal, toll-free at 1-800-347-4750.

We look forward to communicating with you about your investment in Dell.


O. Mason Hawkins, CFA                               
Chairman & CEO  

G. Staley Cates, CFO
President & CIO 

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