Dell founder and CEO Michael Dell. Picture: REUTERS
Dell founder and CEO Michael Dell. Picture: REUTERS

NEW YORK — Dell is setting up meetings with shareholders to assess their demands for getting its $24.4bn buyout done and is also preparing a public response to critics of the deal, people with knowledge of the situation said this week.

Dell and Silver Lake Management are studying ways to address the concerns raised by large shareholders such as T Rowe Price Group, who said the $13.65-per-share offer undervalues Dell.

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 15c, 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 on February 5 announced their agreement to take Round Rock, Texas-based Dell private after it had lost almost a third of its value last year amid stiffening competition in mobile and cloud computing. The offer represents a 25% premium to Dell’s closing price on January 11.

"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.

The buyers need approval by a majority of shareholders, excluding Michael Dell, who owns 14%. T Rowe Price and Southeastern Asset Management together own more than 10% and have said Dell is worth more than the offer price.

David Frink, a spokesman for Dell, declined to comment.

Dell and Silver Lake were not surprised by Southeastern’s response to the buyout, but 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, which is also running a 45-day go-shop period to gauge whether there is a superior offer, has not attracted interest from a potential counterbidder. KKR and TPG Capital both conducted due diligence on Dell and are not planning to pursue a counter-offer.

Dell slipped less than 1% to $13.77 on Wednesday in New York, closing above the buyout price for the third day in a row.

Bloomberg