Some Stakeholders Yell, "Oh... DELL No!"
Subject: Editorial, General Tech | February 16, 2013 - 06:19 AM | Scott Michaud
There have been some groups opposed to the planned deal to cease publicly trading Dell and release their shares. It would seem that for many, a short-term payout of 25 percent over trading price is insufficient and, they believe, undervalues the company. I mean, the price is totally not derived from the value you gave it when you just finished trading stocks at 80 percent of what Dell is offering you or anything. Yes, I am making a joke: some investors were almost definitely going long on Dell. I still suspect that some are just playing hardball, hoping that a quarter on the dollar raise is just a starting bid.
Buckle in, I will separate stockholders opinions into two categories: investment firms and employees.
Ars Technica clearly had football on the mind when they wrote a very Superbowl-themed editorial. Early in the month, Southeastern Asset Management sent a letter to Dell management expressing their stance to vote against a deal to go private. The investment firm controls 8.5 percent of Dell which means their opinion has a fair amount of sway. A short few days later, T. Rowe Price stepped up to likewise oppose the deal. This firm owns 4.4 percent of Dell, which means combined they have roughly a 13 percent vote.
Factor in a bunch of smaller investors and you are looking at almost a fifth of the company wanting to keep it public. That combined voting power slightly overtakes the 16 percent control owned by Micheal Dell and could hamper the festivities.
Employees, meanwhile, are upset all the same. Again, according to Ars Technica and their vigilant coverage states that some employees were force to sell their stock acquired as a part of their 401k at $9 per share – substantially lower than the 13.65$ being offered to investors.
There are several other ways which employees get their stake in the company reduced or hampered, but I would direct you to the Ars Technica article so I do not butcher any details.
Unfortunately these sorts of practices are fairly commonplace when it comes to investment deals. It would appear as if this deal trots on common ground instead of taking the high road.
God, I hate mixed metaphors.