Dell CEO Told to Boost Offer Value or Lose Chances of Going Private
July 3, 2013 11:13 AM
comment(s) - last by
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.
This article is over a month old, voting and posting comments is disabled
7/3/2013 12:11:40 PM
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.
"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home
Dell Profits Shrink as Contenders Battle to Buyout Company
May 17, 2013, 9:32 AM
"Bold" HTC To Ditch "Quietly Brilliant" Slogan, Be Loudly Belligerent
March 25, 2013, 2:25 PM
Meteor Explodes Above Russian Urals, Leaves Nearly 1,000 Injured
February 15, 2013, 11:42 AM
Microsoft to Pour up to $3B USD Into Dell to Help it go Private, Survive
January 22, 2013, 2:07 PM
Quick Note: Mobile Use Surpasses PC in China for First Time
July 22, 2014, 11:18 AM
WSJ: Up to 80 Million iPhone 6 Smartphones to be Produced by Year's End
July 22, 2014, 10:57 AM
Quick Note: NVIDIA’s SHIELD Tablet Gets Official
July 22, 2014, 10:00 AM
Motorola Moto G Successor Reportedly Uncovered, Moto X Discounted by up to $75
July 21, 2014, 1:11 PM
JJ Abrams Unveils X-Wing Starfighter for New "Star Wars" Movie
July 21, 2014, 12:24 PM
Report: NVIDIA Shield Tablet Coming July 29 for $299/$399 USD
July 21, 2014, 9:00 AM
Most Popular Articles
Quick Note: Nokia Devices Now Receiving Windows Phone 8.1 Update
July 15, 2014, 10:42 AM
Microsoft Kills Entertainment Unit, May Shelve Flagship Lumia "McLaren"
July 18, 2014, 7:40 PM
Boeing 777 Malaysian Airlines Flight 17 Crashes in Ukraine
July 17, 2014, 1:00 PM
Tesla Confirms “Model III” EV with 200+ Mile Range, Blames Ford for Missed "SEX"
July 15, 2014, 9:12 PM
FBI Report Suggests That Self-Driving Cars Could Be Used as Rolling Bombs
July 16, 2014, 11:02 AM
Latest Blog Posts
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
Facebook Aims to Provide Internet to "Every Person in the World" with Drones, Satellites
Apr 1, 2014, 10:20 AM
Retail Mobile Sites Experience Outages in Light of Simplexity's Bankruptcy
Mar 14, 2014, 8:48 AM
Tesla vs. BMW: Who Has the Safer EV?
Feb 1, 2014, 2:56 PM
Justice Leaks Details of Next HTC One Two Flagship Phone
Dec 5, 2013, 4:04 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information