DealBook: Dell Board Committee Insists Sale Was Best Outcome

Sean Gallup/Getty ImagesA Dell display station at a technology fair in Germany.

The special committee of Dell’s board that supervised the company’s $24.4 billion sale to its founder reiterated on Wednesday that the deal was the best option for shareholders.

The committee said it bargained hard before the current offer to take it private was finalized.

“We negotiated aggressively to ensure that stockholders received the best possible value,” it said.

The statement comes after weeks of bickering between Dell and some of its shareholders, including its two biggest outside investors, over the $13.65-a-share bid from the company’s founder and chief executive, Michael S. Dell, and the investment firm Silver Lake Partners.

Southeastern Asset Management and T. Rowe Price, who together hold about 13 percent of Dell, have said they will not support the current offer.

Southeastern, an asset management firm with an activist streak, has hired advisers to advance its cause, and it demanded a list of Dell’s shareholders on Tuesday. The firm has said it values Dell at over $20 a share, and people briefed on the matter said it would prefer to see the deal die rather than let the current sale go forward.

For much of the last month, shares in Dell have traded above the offer price, suggesting investors are anticipating an improved offer from its founder. So far, Mr. Dell and Silver Lake have resisted improving their bid. Shares closed on Tuesday at $14.07.

In its letter to Dell’s directors on Tuesday, Southeastern wrote that the board “appears to have dismissed better alternatives for public owners and selected a transaction, which has been publicly derided by shareholders as opportunistic and grossly undervalued, that favors management.”

But the special committee said in its statement on Wednesday that it had considered all possible alternatives, including continuing Dell’s current business strategy; borrowing money and then paying out a special dividend; and selling all or part of the company.

The group, led by Alex J. Mandl, handled the sale negotiations, which were directed on the buyers’ side by Egon Durban, an executive at Silver Lake.

The committee also said it had requested a number of provisions designed to help any competing bidders make a higher offer, including a contract with the investment bank Evercore Partners that rewards the firm for finding a better offer.

Evercore has until March 22 to find a superior bid, though people briefed on the matter have said they do not expect any to arise.

Senate Judiciary Committee Approves Overhaul of Electronic Communications Privacy Act

The bill is not expected to make it through Congress this year and will be the subject of negotiations next year with the Republican-led House. But the Senate panel’s approval was a first step toward an overhaul of a 1986 law that governs e-mail access and that is widely seen as outdated.

Senator Patrick Leahy, the Vermont Democrat who is chairman of the committee, was an architect of the 1986 law and is leading the effort to remake it. He said at the meeting on Thursday that e-mails stored by third parties should receive the same protection as papers stored in a filing cabinet in an individual’s house.

“Like many Americans, I am concerned about the growing and unwelcome intrusions into our private lives in cyberspace,” Mr. Leahy said. “I also understand that we must update our digital privacy laws to keep pace with the rapid advances in technology.”

Mr. Leahy held a hearing about two years ago on whether and how to update the 1986 law, called the Electronic Communications Privacy Act. But the effort has moved slowly, in part because some law enforcement officials have opposed restricting an investigative tool now used increasingly.

Under the law, authorities need to obtain a search warrant from a judge — requiring them to meet the high standard of showing that there is probable cause to believe that a subject is engaged in wrongdoing — only when they want to read e-mails that have not yet been opened by their recipient and that are fewer than 180 days old.

But the law gives less protection to messages that a recipient has read and left in his or her account. In some cases, officials may obtain a court order for such material merely by presenting a judge with facts suggesting the messages are relevant to an investigation; in other cases, prosecutors can issue a subpoena demanding the materials without any court involvement.

Senator Leahy’s bill would generally require prosecutors to obtain a search warrant from a judge, under the stricter probable-cause standard, to compel a provider to turn over all categories of e-mails and other private documents.

The Center for Democracy and Technology, a nonprofit organization that advocates for electronic privacy rights, hailed the committee vote as “historic.”

In a statement, Gregory T. Nojeim, director of the center’s program on security and technology, said it “sets the stage for updating the law to reflect the reality of how people use technology in their daily lives. It keeps the government from turning cloud providers into a one-stop convenience store for government investigators and requires government investigators to do for online communications what they already do in the offline world: get a warrant before reading postal letters or searching our homes.“

Still, the ranking Republican on the committee, Senator Charles Grassley of Iowa, argued that the bill does not strike the proper balance between privacy and public safety. He expressed concerns that changing the standard of proof for obtaining e-mails would inhibit certain investigations, such as child pornography or child abduction cases.

Mr. Leahy argued that the bill does not alter criminal and antiterrorism laws related to search warrants, including exceptions in emergencies where time is of the essence. But he also said the bill was a starting point and he was open to further negotiations. The panel approved it by a voice vote.