T Rowe Price adds its opposition to Dell buyout

Third-largest investor joins fight to block $24.4 bn deal to take Dell private

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T Rowe Price yesterday said it would not support a proposed deal that would see Dell’s founder, Michael Dell, buy back the firm that carries his name with the help of partner Silver Lake and a $2 bn loan from Microsoft.

‘We believe the proposed buyout does not reflect the value of Dell, and we do not intend to support the offer as put forward,’ said T Rowe Price’s chief investment officer Brian Rogers, in a statement.

With a 4.4 percent stake in Dell, worth almost $1.1 bn, T Rowe Price joins Southeastern Asset Management and a number of smaller investors in publicly opposing the deal, which offers a price of $13.65 per share.

Activist shareholders argue that this falls far below the value of the company. ‘You have such credible voices, voices that are highly respected in the investment management community, saying that the price doesn’t make sense,’ Don Phillips, president of research at Morningstar in Chicago, told Reuters. ‘A very likely outcome is that Dell is still going to go private, but at a higher price.’

Michael Dell – who owns 14 percent of Dell – offered $24.4 bn to buy back the PC company on February 5. The firm now needs a majority vote, excluding Michael Dell, for the deal to go ahead.

Voicing its opposition last week, Southeastern put forward a number of alternatives to the go-private deal, including breaking up the company to sell its units separately or borrowing money for a major share repurchase, which Southeastern says would give shareholders a better return.