Mason Hawkins, chairman and chief executive officer of Southeastern Asset Management indicated that his firm is prepared to fight Dell Inc. (NASDAQ:DELL)’s agreement with the consortium of buyers who want to take the company private for $24.4 billion.
In a regulatory filing with the Securities and Exchange Commission (SEC) on Tuesday, Hawkins wrote that his firm hired D.F. King & Co. to provide certain consulting and related services. D.F. King & Co. is one of the leading proxy solicitation and corporate/communications firm with expertise in proxy fights and tender/exchange offers for corporate control.
Carlson Capital's Black Diamond Arbitrage Partners fund added 1.3% net fees in the first quarter of 2021, according to a copy of the firm's March 2021 investor update, which ValueWalk has been able to review. Q1 2021 hedge fund letters, conferences and more At the end of the quarter, merger arbitrage investments represented 89% of Read More
In addition, Hawkins also confirmed that Southeastern Asset Management owned more than 146 million shares or a 8.44 percent stake in Dell Inc. (NASDAQ:DELL). The firm is the largest shareholder of the computer maker aside from its CEO Michael Dell.
According to a report from the New York Times Dealbook, citing an unnamed source familiar with the issue, Southeastern Asset Management also retained the services of an experienced lawyer in mergers and acquisitions, Dennis J. Block, senior chairman of global corporate, mergers & acquisitions of Greenberg Taurig LLP.
In a research note, analysts at Jefferies said that Dell’s investors want the buyers to raise their bid for the company. According to them, the buyers could raise their proposal to $15 a share to satisfy the agitated shareholders.
The analysts also speculated that Dell may not receive any competing offer. They said, “We estimate $15 would yield a 20%-23% IRR and believe private equity would be unlikely to accept a lower rate.”
Most recently, Hawkins expressed his extreme disappointment regarding Dell’s buyout agreement in a letter to the board of directors of the computer maker. Hawkins pointed out that the deal “grossly undervalues” the company, the timing of the bid was “opportunistic,” and denied shareholders ability to take part in substantial value creation of Dell in the future.
In addition, Hawkins said his firm estimated that Dell’s value should be around $24 per share and provided a breakdown of the company’s valuation: net cash ($3.64), Dell Financial Services (DFS) ($1.72), acquisitions since 2008 ($7.58), server business ($4.44), support and deployment ($3.89), PC business ($2.78), software & peripheral ($1.67), unallocated expenses (-$1.00), and DFS value embedded in segments ($1.00).
Analysts believe that Hawkins is determined to fight the deal because his firm could loss substantial amount of money. They estimated that Southeastern Asset Management could loss approximately $800 million as it acquired its stake in Dell Inc. (NASDAQ:DELL) at an average of $20 per share.
Other shareholders including Harris Associated LP, Yacktman Asset Management, and Pzena Investment Management, Inc. (NYSE:PZN) indicated their plan to vote against the DELL buyout agreement.