Dell CEO Reduces Value of Shares in Hopes of Company Going Private
February 14, 2013 5:08 PM
Dell CEO Michael Dell
(Source: Boston Herald)
The value of his 16 percent stake in the company from $13.65 a share to $13.36 a share
Dell's CEO OK'd a lower valuation of his stake in the company in an effort to push a $24.4 billion deal along, which would allow
Dell to go private
Dell CEO Michael Dell agreed to drop the value of his 16 percent stake in the company from $13.65 a share to $13.36 a share. This will help increase the chances of the $24.4 billion deal going through.
Dell told the board he wanted the company to go private back in August 2012, and negotiations with Silver Lake Management LLC started in October. Dell said Silver Lake had raised its proposed offer price "at least once" before.
"To facilitate a price increase by Lake, Mr. Dell and related persons agreed that their shares to be rolled over in the proposed transaction would be valued only at $13.36 per share as opposed to the $13.65 price offered to the company's unaffiliated stockholders," said Dell's Thursday filings.
A shareholder vote for the $24.4 billion deal to go private will be held in June or July of this year, and it will need a majority vote to be approved. For now, Dell's board is conducting a 45-day "go-shop" term where it will look for higher bids. The board created a review committee of independent directors.
Dell has been in a tight spot for a while, as the PC business took a dive and consumers moved toward mobile devices like smartphones. Between a lack of PC upgrades and the fact that
Windows 8 hasn't made much of an impact
on hardware sales yet (Dell's CFO Brian Gladden said Windows 8 wouldn't affect Dell's financial results for the next two quarters), Dell has seen better days.
, Dell reported a profit drop of 47 percent to 39 cents per share while revenue dropped 11 percent to $13.7 billion from a year previous. Its net income fell from $893 million (49 cents per share) in Q3 2011 to $475 million (27 cents per share) in Q3 2012.
Dell is expected to report its next quarterly earnings on Tuesday.
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"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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