Dell buyout plan hits shareholder resistance

Michael Dell may have to raise his $24.4 billion offer to take the computer company he founded private. Irate shareholders are arguing that the proposed leveraged buyout undervalues the third-largest maker of personal computers.

T. Rowe Price and Southeastern Asset Management, the two largest Dell (DELL) outside shareholders, are against the $13.65-a-share deal being spearheaded by Dell and private equity company Silver Lake Partners. 

Another major shareholder, Richard Pzena of Pzena Asset Management, has told Bloomberg News that he will vote against the offer. Other money managers, including Yachtman Asset Management, aren't too enthused about it either.

Though some analysts argue that the deal may go through despite shareholders' objections, many seem to expect Michael Dell and Silver Lake to raise their bid.

Writing in a note to clients, Ashok Kumar of Maxim Group argued that there may be more value to Dell than is shown in the buyout, according to Barron's.

"When speculation around a deal emerged a few weeks ago, we indicated that a price tag of $15 to $18 made sense and we believe the take-out price will need to fall within this range," Kumar wrote.

Wall Street seems to think so as well. Shares of the Round Rock, Texas, company have surged more than 26% over the past month. They closed at $13.76 Wednesday.

Given the large amount of debt factored into the deal, it will be difficult for Michael Dell and Silver Lake to raise their offer materially, Stern Agee analyst Shaw Wu told Bloomberg. His view was backed up by Sanford C. Bernstein analyst Toni Sacconaghi, who The Wall Street Journal notes cut his rating on Dell to "market perform," warning that "a much higher bid was unlikely." If the deal is rejected, shareholders would face a "hard fall," the paper quotes him as saying.

--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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