Southeastern Asset Management's letter to the Dell board (February 2013)
- Written by
- O. Mason Hawkins and G. Staley Cates
- Organisation
- Southeastern Asset Management
- Published
- 8 Feb 2013
- Sector
- Technology hardware (take-private contest)
Read the original at sec.gov (opens in a new tab)
About this letter
O. Mason Hawkins, chairman and chief executive, and G. Staley Cates, president and chief investment officer, of Southeastern Asset Management sent this letter to Dell's board on 8 February 2013. It was filed with the SEC as Schedule III to Southeastern's Schedule 13D. Southeastern owned about 8.5% of Dell for its clients, making it the largest outside shareholder.
The letter responds to the go-private transaction with Silver Lake, announced on 5 February 2013, under which public shareholders would receive $13.65 per share. Southeastern says it will not vote for the deal as structured and keeps open a proxy fight, litigation and Delaware appraisal rights. It reminds the board of its fiduciary duty, especially in an insider transaction, then sets out Southeastern's own valuation, two recapitalisation alternatives the board could have pursued, and a different buyout structure.
Why read it
A worked sum-of-the-parts valuation and leveraged recapitalisation case from a large holder opposing a management-backed buyout, directly relevant to take-private and fairness analysis.
What to notice
- 1
Southeastern counts net cash of $3.64, Dell Financial Services at $1.72 and acquisitions at cost of $7.58 per share, totalling $12.94, so the bid valued everything else at less than $1.00.
Continue the investment thesis
See the 3 remaining takeaways on what this investor is arguing and why, and every analysis across the Letters & Theses library.
Checking what you can open…
“an opportunistically timed bid to take the Company private at a valuation far below Dell's intrinsic value”
Companies discussed
- Dell Inc.
- Silver Lake
Topics
- valuation
- governance
- capital allocation
- board change
L3VLUP does not host this document. It belongs to Southeastern Asset Management; the notes above are L3VLUP’s reading of it.
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