12:29 p.m. | Updated
One of the country’s biggest mutual fund managers signaled its opposition to Dell‘s proposed $24.4 billion sale on Tuesday, as another investor disclosed a major step in a campaign to fight the deal.
T. Rowe Price said in a statement that it was opposed to the $13.65-a-share takeover bid being offered by the company’s founder, Michael S. Dell, and the investment firm Silver Lake. With a stake of about 4.4 percent, T. Rowe Price is Dell’s third-biggest shareholder.
The second-biggest shareholder, Southeastern Asset Management, meanwhile disclosed in a regulatory filing that it had retained D.F. King, a big proxy solicitation firm, as an adviser. It also confirmed that it held about 8.44 percent of Dell’s shares, trailing only Mr. Dell.
Proxy solicitors like D.F. King play important roles in fights over shareholder votes. They canvass a company’s investor base, providing their clients with estimates of how shareholders are leaning and strategies for winning over allies.
Southeastern has also hired Dennis J. Block of Greenberg Traurig, an experienced mergers and acquisitions lawyer, according to a person briefed on the matter.
The emergence of T. Rowe Price as an opponent of the deal is the latest sign of discontent with the management buyout bid. While Mr. Dell controls about 16 percent of the company’s stock, his offer for the computer maker requires the approval of a majority of independent shareholders.
In a statement, T. Rowe Price’s chairman and chief investment officer, Brian C. Rogers, said, “We believe the proposed buyout does not reflect the value of Dell, and we do not intend to support the offer as put forward.”
A spokesman for Dell repeated a statement made on Friday, saying that a special committee of the board had considered a number of strategic alternatives. “Based on that work, the board concluded that the proposed all-cash transaction is in the best interests of stockholders,” according to the statement.
Silver Lake declined to comment.
Shares of Dell closed on Monday above the buyout price for the first time since the offer was announced last week, signaling expectations that the bid might be increased.
In a company release on Friday, Southeastern said it planned to consider all of its options to fight the deal, including a proxy fight, a lawsuit and calling on a Delaware court to determine the fair value of Dell shares.
The high price the firm paid for its holding is probably driving its opposition. Analysts have estimated that Southeastern paid more than $20 a share on average, meaning it would lose over $800 million if the current deal were completed.
A person close to the firm disputed that estimate, suggesting that Southeastern’s cost basis was closer to $16.90 a share.
Southeastern and its chief executive, O. Mason Hawkins, have been unafraid to challenge companies when their stock prices fall. The firm was a major force for change at the oil and natural gas driller Chesapeake Energy last year, eventually winning representation on its board.
With Dell, there is a long road ahead. The vote for shareholders to approve the buyout offer is at least several months away.
DealBook: Big Investors Strengthen Opposition to Dell's Sale
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DealBook: Big Investors Strengthen Opposition to Dell's Sale
