Dell Confirms and Details Rival Bids From Blackstone and Icahn 70
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."
Re:Dude, you're getting a Dell! (Score:5, Interesting)
That is what everybody said about Apple when Steve Jobs came back.
And the reason why Michele wants to take Dell private is so he can do some radical things to it. So who knows? Give the man the benefit of a doubt, grab some popcorn, and see what happens - assuming Michele get the company.
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Yes. In order to imitate Apple he needs to take company private just like Apple did ... oh wait
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Yes. In order to imitate Apple he needs to take company private just like Apple did ... oh wait
That was a different situation. When Jobs returned to Apple, the shareholders understood that the company was in deep doo-doo and radical changes were needed. So Jobs had a lot of leeway.
Dell, OTOH, is doing okay in terms of short term profit (PE is around 8). It probably needs some radical changes for the long term because the market it moving away from Dell's strengths. But there is no shareholder consensus about this. As long as it is a public company, different shareholder factions will be pulling
Re:Dude, you're getting a Dell! (Score:5, Insightful)
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Unfortunately, these "going private" deals usually end with an IPO 2-3 years later. Same old compay with extra debt! The refinancing will make no difference to Dell, since "providing useful products and services at a profit" is what management should be concentrating on.
1) Use other people's money to buy up company
2) Pay self fees for being the Buyout fixer (Profit $$$)
3) Wait 2-3 years
4) Perform IPO
5) Pay self fees for being the IPO fixer (Profit $$$)
6) Sell new shares (Profit $$$)
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apple and dell are totally different companies
dell is like a giant QA department. they buy up parts, test them in a product and sell/market the finished product. although these days with everything on the same silicon they just rebrand
apple like samsung do engineering
they code their OS
develop their own CPU's
design their product
work with manufacturers
integrate all the hardware and software into a single product
any time dell has ventured beyond building lego's they have failed. but it's OK. cars were open lik
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Actually Dell has plenty of financing,servers, and consulting business. They are moving so they sell "IT departments" in a box and hardware is just one piece... Vertically integrated.
This is a last ditch attempt by big holders to fuck it over before it goes private and the board can just ignore such offers outright.
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and the services business is going down the toilet
big companies have their own IT
the little guys buy into da cloud
installing Exchange isn't that hard. most of the problems are due to being cheap, not bad planning
Re:Dude, you're getting a Dell! (Score:5, Insightful)
Do you mean the Motorolas, the PowerPCs (a consortium of apple, ibm, and motorola. That's two experienced chip designers and apple.), or do you mean the current Intel CPUs?
Well, that's it for their computers. I actually have no idea what their portable istuff uses, but I'm rather doubtful it's something they developed. Considering their standard method of obtaining 'cutting edge tech' they either bought and exclusive contract with the developer/manufacturer, or they bought the company itself.
Apple designers have always been great, their engineers don't fall into that category.
I know, the apple fanboys are going to go ballistic over this criticism of their god and savior, and honestly, I don't care.
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And the reason why Michele wants to take Dell private is so he can do some radical things to it. So who knows? Give the man the benefit of a doubt, grab some popcorn, and see what happens
He's already CEO and Chairman. If he can take the company in new profitable directions, then there's no incentive for the other shareholders to sell because they they'd be giving up their shares just before they become more valuable. Their only sensible choice is to get as much money as possible for the shares now, since, if it goes private, they'll never be able to own part of Dell again.
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And the reason why Michele wants to take Dell private is so he can do some radical things to it. So who knows? Give the man the benefit of a doubt, grab some popcorn, and see what happens
He's already CEO and Chairman. If he can take the company in new profitable directions, then there's no incentive for the other shareholders to sell because they they'd be giving up their shares just before they become more valuable. Their only sensible choice is to get as much money as possible for the shares now, since, if it goes private, they'll never be able to own part of Dell again.
That wont happen in the next quarter though? Computers make money based on spreadsheets. Not long term strategy. You either raise the price in the next 4 months or be fired. Pick your poison? Apple was only able to pull off the move to intel macs because of sales of its IPODs. Jobs could only make the IPOD by first selling iMacs etc. If something is not increasing in value quarter by quarter you can't invest to make more money. You need short term money RIGHT NOW so the computer programs can raise the price
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I have to give the thumbs up to taking Dell private. It's the best hope of survival.
They need less corporate idiots ruining it and more radical thought.
Icahn (Score:1)
Icahnnot believe how much money these folks have.
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Icahn haz Dell?
That's what they said about Apple, but now.... (Score:4)
.... 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.
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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.
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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
IBTimes - noscript required (Score:2)
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.
Re:IBTimes - noscript required (Score:5, Informative)
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.
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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?
Re:IBTimes - noscript required (Score:4, Informative)
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.
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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
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Nonsense. There is nothing to indicate "everyone else" will be worse off with Icahn's offer.
Right, nothing but the lessons of history.
Re:IBTimes - noscript required (Score:4, Insightful)
bidding war, so... (Score:2)
..time to go long on Dell stock?
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No! Because you are just pumping TROLLS STOCK, and they are betting on it going up to cover THEIR EXIT when the deal concludes.
Who are Icahn's backers? (Score:4, Insightful)
No story mentions that. He certainly doesn't have 26.8B dollars. Is it a bluff to get the dividends he wanted?
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Because you're not planning to set fire to the house and collect the insurance the second the deal goes through. If you did that would be fraud. If you have enough money fraud perversely translates to 'smart'.
Re:Who are Icahn's backers? (Score:5, Interesting)
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.
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Effectively, they would be paying some stockholders to "go away". Given that smaller holders get their power stripped the worst when a company goes public its something to offer.
Vultures (Score:5, Insightful)
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)
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.
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"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
The only winners... (Score:1)
so, that is a vote of confidence in Michael Dell (Score:2)
NOT. Dude, you're getting a signal here.
take the money and run? (Score:2)
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.