Some institutional shareholders are complaining about Dell’s proposed buy-out, which would see the computer giant disappear from the public equity market behind a $24.4 billion pile of cash. But T. Rowe Price, Southern Asset Management and others think the cash pile isn’t big enough, and they are pressing CEO Michael Dell and his private equity backers for more.
For these shareholders, going public with their opposition to the deal has risks. The biggest is that it leaves them open to criticism for not urging Dell until now to unlock shareholder value.
Dell has been struggling for years to turn around its fortunes. But there is little evidence that its largest shareholders pressed the company to move more quickly with restructuring plans or consider other steps to create value.
The usual response from institutional shareholders is that their stake is too small to exert any real influence. But not in this case. T. Rowe Price and Southern Asset management hold a combined 13% of Dell shares – more than enough to be taken seriously at any time on any issue.
So what have they done to promote a leveraged recapitalization? Or urge a breakup of the company? Or any of the steps Dell has suggested it might take once private?
Big investors have for the most part escaped the harsh criticism that’s been leveled at others for their involvement in underperforming companies. Accountants, investment bankers, rating agencies and even lawyers have all had to endure a public shaming, litigation or worse.
Still, late is better than never when it comes to shareholder activism. And if these investors succeed in squeezing out an improved offer from Dell, they will be immunized from most criticism.
Even so, stepping into the limelight might bring them more than they bargained for.