Criticism Mounts For Dell's $24.4B Proposed Buyout


Criticism of Dell's proposed $24.4 billion leverage buyout is increasing, with some employees now voicing their displeasure, according to a report.

Dell plans to change its Long Term Incentive program, which in effect cancels stock options it had awarded to some employees, according to a report by Ars Technica.

Some of the options granted to employees feature prices above the $13.65 per share offered as part of the leveraged buyout by Silver Lake Partners and others, essentially rendering them worthless, according to the report.

Related: 10 Unanswered Questions Surrounding Dell's Buyout

Last October, Dell forced some employees to sell off Dell stock at $9 per share as part of their 401(k) plans because of a policy change, according to Ars Technica.

Meanwhile, another big Dell investor, T. Rowe Price, has joined the ranks of other investors including Southeastern Asset Management expressing their dissatisfaction with the proposed buyout.

According to Reuters, T. Rowe Price owns 4.4 percent of Dell shares as of Sept. 30, 2012, and is the third largest dell shareholder after CEO Michael Dell and Southeastern Asset Management.

"We believe the proposed buyout does not reflect the value of Dell, and we do not intend to support the offer as put forward," T. Rowe Chief Investment Officer Brian Rogers said in a statement to Reuters.

While some investors are not happy with the deal, some of Dell's solution providers have said they see upside to the company going private under new management.

Meanwhile, a study conducted by research firm Discern found that 62 percent of survey respondents expect low innovation from Dell as a result of the buyout.

"This result was particularly discouraging, as we believe innovation -- in business model and/or technology -- is critical if Dell is going to return to attractive [earnings per share] growth," wrote Cindy Shaw, managing director and research analyst for Discern, in an email.

PUBLISHED FEB. 13, 2013