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Dell Confirms and Details Rival Bids From Blackstone and Icahn 70

Posted by samzenpus
from the dude-you're-buying-dell dept.
DavidGilbert99 writes "Dell has confirmed it has received 'two alternative acquisition proposals' from billionaire investor Carl Icahn and the world's largest equity firm Blackstone. These bids rival the $24.4 billion offer made by co-founder Michael Dell and equity firm Silver Lake last month, who want to take the company private. Dell also confirmed details of the two offers, with both exceeding Michael Dell's original offer of $13.65 per share, with Blackstone offering $14.25 and Icahn offering $15 per share."
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Dell Confirms and Details Rival Bids From Blackstone and Icahn

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  • by Anonymous Coward

    Icahnnot believe how much money these folks have.

  • by realsilly (186931) on Monday March 25, 2013 @12:32PM (#43272393)

    .... Apple is one of the most popular brands ever and that's because it re-invented itself. Dell has a shot at re-branding itself with the right leadership.

    I hope they do and are successful once again.

    • by sl4shd0rk (755837)

      Apple is one of the most popular brands ever

      So is Walmart. That doesn't mean it's the end-all of great business practice.

    • by tirefire (724526)

      Apple is one of the most popular brands ever and that's because it re-invented itself. Dell has a shot at re-branding itself with the right leadership.

      I think you're right on the money there. Apple re-invented itself; Dell will re-brand itself.

      When Apple was in a slump it transformed from a computer company locked in a race to the bottom - fighting beige-box Mac clones with beige boxes of their own - into a design company that produces its own ecosystem of high-margin computers and online services (iTunes store, iOS / OS X app stores). Apple acknowledges this; "Apple Computer" is now just "Apple", officially.

      I don't own a Macbook, and I don't want

  • Warning - site serves ups MULTIPLE video ads that run concurrently. It also seems that they ignore the mute button. Access only with NoScript or other addons enabled.

    • by NeutronCowboy (896098) on Monday March 25, 2013 @12:55PM (#43272815)

      Replying to myself as I can't edit posts: there's a much better write-up at Ars: http://arstechnica.com/business/2013/03/dells-game-of-thrones-icahn-blackstone-make-rival-bids-for-company/ [arstechnica.com] The key part that's missing in the IB Times: how Icahn plans to finance the takeover. Here it is: "Icahn's group would put up a total of $5 billion in cash and equity in Dell as part of the deal, spend $7.4 billion of Dell's cash-on-hand, collect $1.7 billion by financing against Dell's outstanding accounts receivable, and add $5.2 billion in new debt to the company's ledgers."

      In other words, Icahn gets a loan for $5B, spends over $7B of Dell's own cash and takes out two separate loans against Dell's assets for another $8B. In further other words, the only people who would benefit from the deal are current stockholders who think that making an extra 50 cent a share now is a good thing. Everyone else, including employees, will be handed a Dell that will be significantly worse off.

      • by rsborg (111459)

        Vulture capitalism at it's finest. Are leveraged buyouts ever a good idea for anyone other than the "management company" that rapes and pillages the public company? Why is it legal to take a loan out on a company using it's own capital reserves as payment?

        • by NeutronCowboy (896098) on Monday March 25, 2013 @02:07PM (#43273807)

          It's not so much legal as it is a built-in calculation in the offer-sheet. Yes, someone will officially have to tender the full asking price for the company, but the billions that Dell has in cash aren't counted as risk in the loan. Instead, the new owner will immediately use the cash to pay off part of the loan, which of course would have been structured to have the company as collateral. Even if the company isn't collateral, you can't prevent the owner of a company to do whatever they want with the cash in accounting. Yes, it's soulless, but that just goes to show what kind of people engage in LBOs.

        • by Anonymous Coward

          The short answer is: no, leveraged buyouts are almost never good for the company being purchased.

          In fact, while there are doubtlessly examples of such buyouts that did work, I can't think of even one.

          The aftermath of an LBO is completely unsurprising: the purchased company, now being saddled with massive (and often high interest rate) debt and/or stripped of financial assests to pay for its own purchase is at a financial disadvantage to rivals.

          In order to service the debt, R&D funds are slashed and pro

      • by AnonyMouseCowWard (2542464) on Monday March 25, 2013 @01:53PM (#43273625)
        While I hate LBOs as much as the next person (in fairness probably even more), I expect Dell's shareholders to want that extra 50c and to damn the company and its employees. Unless you're both an employee and a shareholder... the plan is to take the shares off of your hand, why would you care what happens to the company afterwards? The Board of Directors is responsible to shareholders, not employees. Rationally, they'd probably vote for Dell to get gutted. Yay, unbridled capitalism.
  • ..time to go long on Dell stock?

    • No! Because you are just pumping TROLLS STOCK, and they are betting on it going up to cover THEIR EXIT when the deal concludes.

  • by poity (465672) on Monday March 25, 2013 @12:49PM (#43272701)

    No story mentions that. He certainly doesn't have 26.8B dollars. Is it a bluff to get the dividends he wanted?

    • by slew (2918) on Monday March 25, 2013 @01:16PM (#43273073)

      No story mentions that. He certainly doesn't have 26.8B dollars. Is it a bluff to get the dividends he wanted?

      Probably, it is a bluff, but Mr Icahn is the king of leveraged buyouts (basically you take a loan out to buy the company with the company you bought as colateral). Kind of like how you buy a house with a loan, except the "house" (well actually the company that holds the house as an asset) really owes the money, not you.

      Why would someone invest the money for a leveraged buyout (LBO)? It's because the debt is generally structured in tranches with different terms and interest rates, rather than one big lump. The senior tranches generally yield a low interest rate but are backed by a higher percentage of the collateral so you can attract more risk-adverse money. The junior tranches generally have a high interest rate for those with the stomach (much higher than a typical bank loan, so it is more profitable, but more risky, essentially junk bonds). With a typical LBO structure people can make different types of bets on the same loan segmenting the secondary loan market making it much easier to attract the money from the capital markets than a straight-up monolithic loan of $28.6B with uniform risk profile.

  • Vultures (Score:5, Insightful)

    by Anonymous Coward on Monday March 25, 2013 @01:16PM (#43273079)

    Witness first hand the attempted destruction of a large American company. These bids aren't serving anyone's interest except a select few. (Despite claiming to be for "shareholder interest")

    If any of these parties get hold of Dell, the company will be dead inside a few years. Assets stripped, loaded with debt, pensions and retirement plans raided, thousands laid off. Sound familiar? Yeah, it does. Because you've seen it happen hundreds of times if you read the news.

    Something is broken. Why is there so much money to be made by destroying companies, jobs, and livelihood? Why is it legal?

    How long before we resort to publishing the personal details, addresses of corporate raiders and mailing them to the millions who have lost their jobs and had their retirements stolen? While vigilante justice isn't a solution, it is a failure mode. And failure is what is happening here.

    • Re:Vultures (Score:4, Insightful)

      by schnell (163007) <me@schnelTWAINl.net minus author> on Monday March 25, 2013 @05:39PM (#43276149) Homepage

      These bids aren't serving anyone's interest except a select few. (Despite claiming to be for "shareholder interest") ... Why is there so much money to be made by destroying companies, jobs, and livelihood? Why is it legal?

      These bids are absolutely in the shareholder interest, that's who is making the money here (at least in the short term). Nearly all companies exist for the purpose of the people who own them (shareholders), not the people who work there. If you want a company that runs for the benefits of its workers, you're looking for a co-op (where the members are also the owners), but they are relatively few in number and aren't suited to exist in certain industries where you need funding from outside sources to start or build your business.

      As to why it's legal... why not? Let's say you run a diner and someone offers you $100K for it and says they will buy it and keep it running. I offer you $150K for the diner but say I'm going to close it down and convert into a bar, firing all the current employees in the process. Why should it be illegal for you to take my higher bid? You might not take my bid because you find it morally distasteful. But it certainly shouldn't be illegal for me to offer that or for you to accept it.

      • by Xest (935314)

        "Why should it be illegal for you to take my higher bid? You might not take my bid because you find it morally distasteful. But it certainly shouldn't be illegal for me to offer that or for you to accept it."

        It's not the offering or accepting that's the problem, it's the shutting down and laying off the staff that's the problem - the point being that if the only way to make the $150k bid tenable is to destroy the business then something is broken, effectively there should be legislation in place to fix what

  • ...are likely to be Dell's current shareholders who may end up collecting a tidy premium for their shares. http://en.wikipedia.org/wiki/Winner's_curse [wikipedia.org] Let's hope that the ensuing bidding war does not cause Dell to be saddled with a crippling amount of LBO debt.
  • NOT. Dude, you're getting a signal here.

  • So...MD should call Icahn on the offer, take his cut up front and walk. Then either buy the pieces back at a fraction of the price when the company goes toes up or just take the money and start a new company that does it just the way he wants to go, but without all the baggage.

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