By Tom Hals
Feb 6 (Reuters) - Michael Dell's offer to take Dell Inc
private for $24.4 billion should be blocked because the
leveraged buyout is unfair to the struggling computer company's
stockholders, according to a lawsuit by an individual investor
that was filed on Wednesday.
The buyout announced on Tuesday at $13.65 per share
substantially undervalued the company's long-term prospects,
according to the lawsuit, which seeks class action status to
represent all Dell investors.
Michael Dell, founder of the company conceived in a college
dorm room, teamed up to make the offer along with the Silver
Lake private equity firm and Microsoft Corp, whose operating
system is used in Dell computers. They hope to revive the
struggling company away from the scrutiny of public markets.
Some shareholders said they were angered by the lack of
specifics about the deal, making it hard for them to determine
if the price was fair. The company, which declined to comment on
the lawsuit, had said the board had conducted an extensive
review of its strategic options before agreeing to the buyout.
The deal was priced at a premium of about 25 percent above
where the share price stood before news of the buyout talks
leaked in January. The complaint by shareholder Catherine
Christner said the deal was priced 22 percent below Dell's stock
price a year ago.
The lawsuit in the Court of Chancery in Delaware, where
Round Rock, Texas-based Dell is incorporated, said the deal was
timed to seize the company just as it is primed to capitalize on
the move into the high-margin software business.
"By engaging in the going private transaction now -- in the
midst of the company's transition from a PC vendor to full
service software and enterprise solution provider -- the board
is allowing defendants M. Dell and Silver Lake to obtain Dell on
the cheap," said the lawsuit.
Almost every merger worth more $100 million prompts a
shareholder lawsuit seeking to review or block the transaction.
While the vast majority of the lawsuits settle without any
payment to shareholders, some have uncovered significant
conflicts of interest that threatened the deal, as in the buyout
of Del Monte Foods.
The case is Catherine Christner v Dell Inc et al, Delaware
Court of Chancery, No. 8281.
Attorneys for the plaintiff: Samuel H. Rudman and Randall J.
Baron of Robbins Geller Rudman & Dowd
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