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In total, Southeastern Asset Management believes Dell should be worth close to $24 per share and proposes a leveraged recapitalization to reward shareholders with a special dividend.
"As opposed to forcing shareholders out at $13.65, this option would have allowed all shareholders to receive a large cash payment while retaining ownership of significant future cash flow streams. The revenue mix of Dell's business has changed as a result of strategic acquisitions, resulting in the fact that roughly half of the annual free cash flow generated comes from higher growth enterprise businesses while the other half comes from legacy businesses linked to the PC," the company wrote in the letter.
Southeastern Asset Management believes there is significant opposition from other shareholders to force Dell to reconsider other alternatives.
"We are confident our fellow shareholders are as disappointed as we are with the proposed $13.65 per share price, and the company could pursue such alternatives when the non-conflicted shareholders ultimately vote against the proposed transaction," the firm wrote.
Southeastern Asset Management is not the only investor to express displeasure in the deal, but it might be the largest.
Meanwhile, Dell countered in a filing with the SEC Monday by defending its decision to seek a buyout with Silver Lake Partners and said it considered an array of strategic alternatives before selecting the $24.4 billion deal.
"The board concluded that the proposed all-cash transaction is in the best interests of stockholders. The transaction offers an attractive and immediate premium for stockholders and shifts the risks facing the business to the buyer group," according to the filing. "In addition, and importantly, the go-shop process provides stockholders an opportunity to determine if there are alternatives that are superior to the present offer."