Dell Inc. is setting up meetings with shareholders to assess their demands for getting its $24.4 billion buyout done and also preparing a public response to critics of the deal, said people with knowledge of the situation.
Dell and Silver Lake Management LLC are studying ways to address the concerns raised by large shareholders such as T. Rowe Price Group Inc., who said the $13.65-a-share offer undervalues the company. While Silver Lake is opposed to raising the price, one of the people said, the firm wants to meet with shareholders to gauge whether they would expect a bump of more than $1 a share or as little as 15 cents, said another person, who asked not to be identified because the process is private.
In the largest leveraged buyout since the financial crisis, founder Michael Dell and Silver Lake announced Feb. 5 their agreement to take Round Rock, Texas-based Dell private after the company lost almost a third of its value in 2012 amid stiffening competition in mobile and cloud computing. Their offer represents a 25 percent premium to Dell's closing price Jan. 11, the last trading day before Bloomberg News first reported the buyout talks.
"I don't think the current offer will get the shareholder vote, especially given the fact that the two largest shareholders have come out early and against," said Louis Meyer, an analyst at Oscar Gruss & Son Inc.
The buyers need approval by a majority of shareholders, excluding Michael Dell, who owns 14 percent of the shares. T. Rowe Price and Southeastern Asset Management together own more than 10 percent of the stock and have said Dell is worth more than its buyers have offered.
David Frink, a spokesman for Dell, declined to comment.
While Dell and Silver Lake weren't surprised by Southeastern's response to the buyout, they were caught off guard by how quickly T. Rowe Price and others voiced opposition to the deal, one of the people familiar with the situation said. Dell and Silver Lake are evaluating a public response because they want to halt Southeastern's momentum, said this person.
Evercore Partners Inc., which is also running a 45-day go- shop period to gauge whether there's a superior offer, hasn't attracted interest from a potential counter-bidder, said the people familiar. KKR & Co. and TPG Capital both conducted due diligence on Dell and aren't planning to pursue a counter-offer, said one of these people.
A representative for KKR didn't respond to a message seeking comment left outside normal business hours. Lisa Baker, a spokeswoman for TPG at Owen Blicksilver Public Relations Inc., declined to comment.
Dell slipped less than 1 percent to $13.77 Wednesday in New York, closing above the buyout price for the third day in a row.
The buyers may sweeten their offer by distributing a special dividend, said Gruss's Meyer. Opposing investors will first push for a higher price, he said. Failing that, they will probably "press for some sort of recapitalization, such as a special dividend." The company is supposed to distribute at least one dividend, for 8 cents a share, before the summer, when the deal is expected to close.