Pension funds have lined up on different sides of the proposal to take Dell Inc. private, as the company postponed until July 24 a shareholder vote on the deal.
The $165.5 billion Florida State Board of Investment, Tallahassee; the $25.9 billion Connecticut Retirement Plans and Trust Funds, Hartford; the $12.8 billion Illinois State Board of Investment, Chicago; and the $1 billion American Federation of State, County and Municipal Employees staff pension plan, Washington, already have voted their Dell shares in favor of the company-endorsed deal, led by Michael S. Dell, chairman and CEO, and Silver Lake Partners LP.
The Florida fund has 3.1 million shares,or 0.18% of the company's total 1.78 billion outstanding shares, Michael McCauley, senior officer-investment programs and governance of the Florida board, said in an e-mailed response to questions.
The Connecticut fund has 722,700 Dell shares, David S. Barrett said in an e-mailed response to questions. He is communications director in the office of Treasurer Denise L. Nappier, sole trustee of the fund.
The Illinois fund has 127,321 shares, said William R. Atwood, executive director; the AFSCME plan has 140,558 shares, said John Keenan, corporate governance analyst.
But the $166 billion California State Teachers' Retirement System, West Sacramento, and C$129.5 billion (US$124.5 billion) Ontario Teachers' Pension Plan, Toronto, voted against the deal, according to plan representatives.
The California fund owns 3.2 million Dell shares. Ontario plan officials didn't disclose the fund's Dell holdings.
T. Rowe Price Associates Inc. also is opposing the leveraged buyout, according to a February statement by Brian Rogers, chairman and chief investment officer, reported by Pensions & Investments. In addition, Yacktman Asset Management and Pzena Investment oppose the deal, according to a spokesman for Southeastern Asset Management Inc., who declined to be named. Southeastern joined with Carl Icahn and affiliated Icahn funds to call on shareholders to oppose the Dell deal, offering a counter proposal.
T. Rowe owns 4.09% and Yacktman and Pzena each 0.7% of Dell.
Kylie Muratore, T. Rowe Price spokeswoman, declined to comment.
“BlackRock Inc., Vanguard Group Inc., and State Street Corp., three of Dell's largest shareholders, indicated late this week that they're voting in favor of the Silver Lake-led deal, according to a person with knowledge of the matter,” a Bloomberg July 19 story reported. BlackRock, Vanguard and State Street previously opposed the deal, according to Bloomberg and other reports.
BlackRock owns 5.3% of Dell. Michelle Edkins, BlackRock managing director and global head of corporate governance and responsible investing, couldn't be reached for comment.
Linda Wolohan, Vanguard Group spokesman, and Anne McNally, State Street Global Advisors spokeswoman, said officials at their respective firms won't comment on their proxy voting. Vanguard owns 3.7% of Dell. State Street owns 3.4%.
Among other managers, Calvert Investments voted its 116,325 shares in favor of the Dell deal, according to Melinda Lovins, media relations manager.
Proxy-voting advisers Institutional Shareholder Services Inc.; Glass Lewis & Co. LLC; Egan-Jones Proxy Services; and Marco Consulting Group, whose services include proxy voting advice, recommended their institutional investor clients support the Dell deal:.
Dell's board Feb. 5 entered into an agreement with Mr. Dell and Silver Lake Partners to take the company private in a deal offering shareholders $13.65 a share in cash. Mr. Dell, who would remain as chairman and CEO, would be the majority ownerof Dell, while Silver Lake and its affiliate funds would own the rest of the company. Mr. Dell is now Dell's largest shareholder, holding 13.9% of the company's 1.7 billion shares outstanding. Dell stock closed July 18 at $13.12 a share.
Activist investor Carl Icahn and officials at affiliated Icahn funds and Southeastern Asset Management contend the deal undervalues Dell. They are offering a counter, conditional proposal. The Icahn funds together own 8.7% of Dell, while Southeastern owns 9.9%.
Mr. McCauley said in his e-mail he and other FSBA representatives “personally met with two members of the Dell special committee” — formed to review the deal by Dell's board and composed of Dell independent directors — “as well as senior investment staff of Southeastern Asset Management ..., discussing in detail the firm's current business strategy and the risks and rewards inherent in the proposed leveraged buyout. Although SAM's bullish valuation case and detailed company analysis is very well done and compelling, the alternative financing and recapitalization structures ... proposed by Icahn/SAM represent material risks not found in the LBO's all-cash offer.”