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.
"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA
Dell Profits Shrink as Contenders Battle to Buyout Company
May 17, 2013, 9:32 AM
Report: Dell Now Mulling Two New Buyout Offers
March 25, 2013, 9:52 AM
Dell CEO Reduces Value of Shares in Hopes of Company Going Private
February 14, 2013, 5:08 PM
Microsoft to Pour up to $3B USD Into Dell to Help it go Private, Survive
January 22, 2013, 2:07 PM
Smart Security Cameras: 5 Good Choices For Any Budget
July 25, 2016, 7:13 PM
Top 5 Smart Watches
July 21, 2016, 11:48 PM
Retiree Sues Apple For $7,500 for Wiping Honeymoon Photos From His iPhone
November 30, 2015, 10:23 AM
iPhone 7 May Pack 3-4 GB Memory, More Storage; 4-Inch Comeback is Rumored
November 20, 2015, 10:12 PM
OnePlus One, OnePlus 2 Will Receive Android Marshmallow in Q1 2016
November 16, 2015, 9:58 AM
Lenovo Whoa: Motorola Droid MAXX 2 and Turbo 2 Break Cover in Leaks
October 26, 2015, 3:12 PM
Most Popular Articles
iPhones May Get Curved Screens Next Year
August 24, 2016, 6:45 AM
Drones at the Airport
August 26, 2016, 5:00 AM
First Apple Computer Auctions for $815,000
August 27, 2016, 7:51 AM
5 Easy Ways to Lower Blood Pressure By Monique C. Bethell, Ph.D.
August 25, 2016, 8:00 AM
2 NEW PlayStation 4 Models - Unveiling September 7th
August 23, 2016, 6:23 AM
Latest Blog Posts
First Self-Driving Car debut on the streets of Singapore
Aug 28, 2016, 4:10 PM
Coming Soon - Drones and Airports
Aug 24, 2016, 12:40 PM
SolarCity’s Gigafactory: A Milesone in Emerging Technology by Lily Emamian - 15 August 2016
Aug 15, 2016, 6:30 AM
Sceptre Airs 27", 120 Hz. 1080p Monitor/HDTV w/ 5 ms Response Time for $220
Dec 3, 2014, 10:32 PM
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
More Blog Posts
Copyright 2016 DailyTech LLC. -
Terms, Conditions & Privacy Information