NEW YORK (Reuters) - At least three shareholders who collectively hold nearly 3 percent of Dell Inc's DELL.O shares plan to vote against Chief Executive Michael Dell's $24.4 billion buyout offer, raising questions about shareholder proxy adviser Institutional Shareholder Services' sway with the PC maker's shareholders.
The three managers - Highfields Capital Management, Pzena Investment Management and Yacktman Asset Management - owned 50.65 million shares combined out of the PC maker's 1.76 billion shares outstanding as of March 31, according to Thomson Reuters (TRI.TO) data.
Boston-based investment management firm Highfields Capital Management, which held a 1.3 percent stake in Dell as of March 31, plans to vote against the buyout by Mr. Dell and private equity firm Silver Lake, sources familiar with the situation said on Thursday. The sources wished to remain anonymous because they are not permitted to speak to the media.
On Monday, Richard Pzena of Pzena Investment Management, which owns a 0.7 percent stake, told CNBC he will vote against the Dell buyout proposal. The following day, Yacktman Asset Management, which has a 0.85 percent stake, said it too would vote against the Dell buyout, in favor of Carl Icahn and Southeastern Asset management's buyout proposal of the company.
Institutional Shareholders Services (ISS) is recommending shareholders accept Mr. Dell's proposal.
"ISS' role is to analyze the deal and make a recommendation that we see as being in the best interest of shareholders. That's what we've done in concluding that taking $13.65 (per share) now is a better alternative than continuing to hold equity in a publicly-traded Dell," an ISS spokeswoman said in an e-mail to Reuters.
"At the end of the day however, as with any proxy vote, shareholders will make their own decisions based on their own circumstances," she said.
A Dell spokesman declined to comment.
The decisions by the three firms to vote against the buyout by Mr. Dell and Silver Lake come despite recommendations by ISS, Glass Lewis & Co and Egan-Jones proxy services, who are all in favor of the deal.
Traditionally, many thought that when heavyweight proxy advisory firm ISS made its recommendation, institutional investors followed.
But that is not always the case. Earlier this year, activist investor Jana Partners pushed for a break up of fertilizer company Agrium Inc (AGU.N) (AGU.TO) and nominated a slate of directors to the company's board. ISS backed two of Jana's directors, but shareholders voted with management.
Also, in May shareholders opposed a plan to strip JPMorgan Chase & Co (JPM.N) Chairman and Chief Executive Officer Jamie Dimon of his chairmanship, despite recommendations by both Glass Lewis and ISS to take the chairman title away from Dimon.
Institutional investors make a point to say that they use proxy adviser's recommendations as one of many data points to make its decisions.
For example, in BlackRock Inc's (BLK.N) annual review, which outlines its corporate governance processes, the New York-based investment management firm states: "We do not follow any single proxy advisor's voting recommendations, but use several different inputs in our own analysis in advance of making our voting decisions."
BlackRock, which is the ninth biggest shareholder in Dell with a 9 percent stake, declined to comment on Dell.
Still, it is going to be a close vote, and many shareholders may vote in favor of the Mr. Dell's buyout.
Icahn is hoping that more shareholders ignore the proxy advisers' recommendations.
Icahn wants shareholders to vote against the buyout and then ask a court in Delaware, where Dell is incorporated, to appraise the fair value of the shares.
"We believe if you seek appraisal, you will receive more," Icahn said in a letter to Dell shareholders this week.
On Thursday afternoon, Icahn told Bloomberg TV he plans by Friday morning to increase his offer by adding warrants to his bid for 72 percent of the company shares, but further details were not immediately available.
Reporting by Jessica Toonkel; Additional reporting by Michael Erman; Editing by Chris Reese