Print 8 comment(s) - last by bug77.. on Jul 4 at 11:47 AM

ISS hasn't made a final decision yet, but the odds seem stacked against Michael Dell for now if he doesn't provide a better offer

The founder and CEO of Dell Inc. could lose his company if he doesn't heed the warnings of a special committee of the board.

Michael Dell, who founded Dell Inc. in 1984, is trying to take the computer company private, but Dell's second largest shareholder -- Icahn -- is making that a bit more difficult with an investment-backed proposal of its own. 

Dell, which is being backed by buyout partner Silver Lake Management LLC in this process, was told to up his offer from $24.4 billion in order to secure approval from investor-advisory firm Institutional Shareholder Services (ISS).

Reports have said that ISS is leaning against Dell's offer unless he increases it. Neither Dell nor Silver Lake have said whether they'll do so or not yet, but Dell's special committee of the board is pushing for Dell to make a larger offer. 

Billionaire Carl Icahn, on the other hand, revealed this week that he provided $3.42 billion (66 percent) of the debt financing for the bid. Icahn, along with investment bank Jefferies & Co, have secured $5.2 billion total. 

ISS hasn't made a final decision yet, but the odds seem stacked against Michael Dell for now if he doesn't provide a better offer. Banks financing the transaction are reportedly working on a contingency plan to hike up the offer now.

Dell has had a whirlwind of problems aside from issues with going private. In May, the company reported a 79 percent decline in profits, with net income falling to $130 million from $635 million compared to the same quarter of 2012. This is mainly due to a shrinking PC market.

Dell has looked into many avenues to help his company go private, such as dropping the value of his 16 percent stake in the company from $13.65 a share to $13.36 a share. 

Back in January, Microsoft also said it would pour $3 billion in order to help it go private and survive. 

Source: Reuters

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

Eh, it's just a negotiation
By bug77 on 7/3/2013 12:37:23 PM , Rating: 5
Have you ever seen a negotiation to go like:
- How much?
- $X
- Deal!

Me neither.

RE: Eh, it's just a negotiation
By Strunf on 7/4/2013 7:51:35 AM , Rating: 2
HP - How much ?
Autonomy - $10.2B
HP - Deal!

And there are plenty more...

RE: Eh, it's just a negotiation
By bug77 on 7/4/2013 11:47:05 AM , Rating: 2
While much inflated, I'm pretty sure that figure was negotiated, too. Badly, but negotiated.

By inperfectdarkness on 7/3/2013 11:28:16 AM , Rating: 2
Mike can just wait a few months to a year, and the company will gladly accept his original offer. Heck, they might even accept less. Dell isn't going anywhere but down right now. I don't blame a "declining PC market" for that. The PC market is fine. If MS thinks it can sell a $1200 glorified tablet, there's plenty of money to be had.

RE: Or....
By othercents on 7/3/2013 11:55:44 AM , Rating: 2
He won't be able to wait that long. While the company won't be worth that much in a year the offer already on the table is better than the one Michael Dell is making.


RE: Or....
By BRB29 on 7/3/2013 12:11:40 PM , Rating: 2
There's a decline in the consumer pc market. Dell is actually up 12% growth in the enterprise sector where the margins are higher. I think Dell posted revenue of $5.5bil in that.

BTW mentioning 79%(~$500mil) lower net profit is very misleading when you don't mention the 14.1bil revenue. If Dell increased their revenue by $700mil or just 5% increase and expenses remained the same then it would look like their profits jumped from $130mil to $830mil. You can say then they have 400+% jump in profits.

If Dell holds out, they're not going to lose value or go under. What Michael Dell wants to do is probably the same thing Jack the Ripper did back in the 80s and 90s with GE.
Trimming 10s of thousands of employees, selling off divisions, etc... reorganize and become lean. This is better done as a private company.

Windows XP
By btc909 on 7/3/2013 1:44:21 PM , Rating: 2
Finally putting an end to Windows XP has boosted sales in the corporate sector. It's far more difficult to convince home and small business users to dump XP.

RE: Windows XP
By Taft12 on 7/4/2013 10:30:04 AM , Rating: 2
The new Dell corporate desktops/laptops based on Haswell are the first ones to not have XP drivers available. Even the slowest corporate adopters are being forced to move on now.

"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain

Latest Headlines

Most Popular Articles5 Cases for iPhone 7 and 7 iPhone Plus
September 18, 2016, 10:08 AM
Automaker Porsche may expand range of Panamera Coupe design.
September 18, 2016, 11:00 AM
Walmart may get "Robot Shopping Carts?"
September 17, 2016, 6:01 AM
No More Turtlenecks - Try Snakables
September 19, 2016, 7:44 AM
ADHD Diagnosis and Treatment in Children: Problem or Paranoia?
September 19, 2016, 5:30 AM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki