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Dell Said To Be In Buyout Talks With Private-Equity Firms
puddingebola writes "Dell Inc. is reported to be in buyout talks with private equity firms. From the story, 'Dell is discussing going private with at least two firms, said one of the people, who declined to be identified because the talks are private. The discussions are preliminary and could fall apart because the firms may not be able to line up the needed financing or resolve how to exit the investment in the future, the people said.'"
Lots of people just decided it's a done deal. Well played Dell.. well played
...you're getting a Dell!
I Hear a cackling that sounds a lot like Steve jobs.
Mod me down, my New Earth Global Warmingist friends!
About twenty five years late.
Dude... you're getting redundant!
Proverbs 21:19
First they give the money back to the shareholders, then they shut the company down.
Ita erat quando hic adveni.
And then it'll stop being an overpriced joke where the only cool part is that you just paid 500 dollars to get a fancy LED on your case.
Oh wait, what the fuck is cool about that shit?
I'd shut it down and give the money back to the shareholders.
Bogtha Bogtha Bogtha
If they are bought out, Apple fans will likely laugh remembering Dell's famous quote about shutting down Apple.
If they aren't... their stock surged on speculation of going private... it could plummet if the buyout doesn't happen. Microsoft offered to buy Yahoo in the spring of 2008, was rebuffed, and Yahoo stock took a nosedive. The second buyout offer didn't pan out either, but they didn't take the same beating.
Four years later, the equity firm is several hundred million dollars richer, Dell goes bankrupt and is liquidated, and thousands of former Dell employees are out of work.
If you were a bank considering a loan to Dell (and not already in collusion with the private equity firm), you should be very very skeptical you will ever see your money again.
Editor, A1-AAA AmeriCaptions
As far as I know, "private equity" firms are companies that restructure companies while borrowing cash to finance said company ... but leaving the company holding the bag on that dept. Should the company fall (now with even more debt and someone else steering the ship) the equity firm gets a big pay off while yet another company goes under.
Good luck with that. *rolls eyes*
PEBO has a tendancy to come in at the bottom. Buy and hold investors get SCREWED by being forced to tender their shares for cash. PE gets the shares near the bottom. If it turns around, the shareholders don't get to participate. They're forced out. Even if it only comes back a little, averaging down might have rescued you; but it can't... because you're out. PE got your shares. Forced tender. Absolute suckage. IMHO, being a public company requires... you know... some obligation to the public. M and A is OK, but IMHO they shouldn't be allowed to go private.
I've bought two Dells since my Pentium Pro, not counting my old Alienware, before Dell bought them.
My most recent two were cheap mid-high range from Best Buy or similar, rather than mail order. Dells on display were now the premium ones, for identical features.
So...screw 'em. Dell has lost its way.
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
That is the only singular way I can see it will survive. Good? I have no clue.
Isn't it fun to do that when you're on the private equity firm side? There's no risk whatsoever, and you get nice fat consulting fees and management fees and bonuses.
Also, typically the management that sold to the private equity firm takes home a nice big paycheck as part of the deal.
I am officially gone from
Farewell Dell. I feel sorry for any employees with retirement there.
Non bene pro toto libertas venditur auro
Up until May of last year, I worked at Dell as a help desk support representative for one of their clients. IMHO, Dell is in trouble because they have stopped innovating. They've put no effort into making a tablet PC that is as good as what any of the competitors offer, and instead of keeping their technical support focused on supporting their products, that have instead decided to diversify and provide support for companies like Boeing who needed help with their infrastructure and were more willing to sack their entire IT department and get it at a cheaper cost. Nothing new here, no sir.
Why couldn't it be HP?
Dell is still making money. Just not growing. I know I know the shareholders cry liquidate if they do not see results by eveyr single quarter with growth regardless of solid fundalmentals and cash onhand.
It is rumored IKahn is trying a hostile takeover with HP and with both HP and Dell gone it means big trouble for corporate buyers. Perhaps the unthinkable SamSung and Asus be corporate products?
Or will it damage the Windows and PC brand more? We keep hearing how PCs are dead and how we are all dying to do real content creation on single tasking oriented GUIs on tiny tablets (sarcasm intended).
Could there be some truth? As in the PC will remain as the mainframe for some special apps no one cares about locked in a server room somewhere? I wish Dell or HP to stay as this will cause chaos in the corporate market. Perhaps that is what is needed or not? What do you all think?
http://saveie6.com/
Michael Dell has always swallowed more of Balmer's cock, than would generally be considered comfortable. And Gates's before him. Would new ownership affect this longstanding, gaging, relationship?
* Carthago Delenda Est *
A Dell - Rolling in the deep.....
Admittedly, my understanding of the rules of public corporation governance is sketchy, but why are stockholders forced to sell their shares? Maybe if they changed the rules so that no one could ever be forced to sell, things would be different.
Dell's assets include much more than desktops/latops/servers. For instance, a couple years ago they bought SecureWorks, an MSSP that Gartner positions above Verizon, IBM, and Symantec. They have made many other acquisitions in recent years. From the article, Dell has net $5 billion in cash. I don't think Dell as a company is going anywhere, public or private. Maybe they'll pull an IBM and only sell of the PC side of the house.
Because it is a public company run for the good off all shareholders – and private equity buyouts is the one great defense against a complacent management or minority shareholder.
What if a firm will not be run for the benefit of the shareholder. Maybe the founding family likes the prestige and perks of “owning” a business. Maybe the CEO likes running a big firm – easier to justify the private jet. What are you to do then? Or, take the fillip argument. Dell right now trades at $12.50. Buyout firm offers $20 and you want to take it. But Michael Dell puts his foot down and says no – I want to stay on as CEO – what are you to do?
So the board must seriously consider all proposals but in front of it. Read up on Barbarians at the Gate. Or sit down and watch “Other’s People Money” – it’s fiction – but it’s a good start. http://www.imdb.com/title/tt0102609/
Dell had a 'way'?
There are two types of people in the world: Those who crave closure
I'm still not seeing why allowing the board to force shareholders to sell is a good thing. If the majority of the shareholders want to run the company in an unprofitable way, so what? Why should anyone be allowed to force them to do otherwise? The minority shareholders can sell their shares and find a more profitable company in that case. If the founding family doesn't have a majority of shares, then this shouldn't even be a problem. Or, for your flip argument, if Michael Dell refuses to sell at $20, and he's the majority shareholder (he has more than 1/2 the shares), then again, I don't see the problem: he owns most of the company, so he should be able to do whatever the hell he wants. Don't like it? Don't buy into a company where one dude owns most of the company. Or, if he doesn't own more than half the shares, then this situation shouldn't arise, as he should be outvoted by others.
Now, in my hypothetical world where no one can be forced to sell, if some private firm goes out and buys up 95% of the shares, then they effectively have control of the company anyway, even if 5% of the shareholders are curmudgeons who refuse to sell. Since they only have 5%, they don't have enough power to do anything.
What am I missing? Other than the fact that the logistics of contacting a bunch of people who have stock shares in their IRA accounts and giving them an offer may be a lot of extra work for the private-equity buyer (but it should be pretty easy these days since most people have their portfolios with a relatively small number of brokerages; also, most shares are probably owned by institutions, not individuals anyway), I'm not seeing the downside.
Dude your getting sold!
Colour coded input jacks changed the back side of personal computing.... a Dell innovation.
What am I missing? Other than the fact that the logistics of contacting a bunch of people who have stock shares in their IRA accounts and giving them an offer may be a lot of extra work for the private-equity buyer (but it should be pretty easy these days since most people have their portfolios with a relatively small number of brokerages; also, most shares are probably owned by institutions, not individuals anyway), I'm not seeing the downside.
The problem here is that you want to treat everybody fairly. When this has been done in the past the buyer would offer generous terms until they got to the 50% mark – at which point they effectively owned the firm – and which point they offered every else a much lower price. Take it or lump it.
This way it’s public. No sweetheart deals. Everybody gets the same price.
As to your larger point - sure, try to pick apart the ownership of Samsung or Formula One. Or read up on early American Railroad corporations.
But let’s start off with your example. You own Dell at $12.50 because you think Dell is worth $12.50. That’s fine. Michael Dell buys 51% of the company – no change in the fundamental underlying value of the company so it’s still $12.50. Then Michael announces that the new mission of Dell is provided him with a lavish lifestyle and that he will be confiscating all of the profits in various tricky joint ventures, sweat heart sales, and a lavish corporate lifestyle. Your stock falls to $1.00.
You suggest 95%, I use 51% - but in reality a holder of 20 to 30% can screw over the minority holders.
Your right – you could lump it. Sell the stock that you think is valued at $12.50 for a $1.00 and invest it someplace different. But how would that make you feel? Is the only option you have as an owner is to walk away?
Hmm, thanks for explaining it. It does make sense now.
they'll probably kill off their pc unit and reorganize.
If Dell is going to go down the tubes, who's the replacement?
We've been very happy with Dell computers over the past 10-15 years. We don't need or use their support, but the computers themselves have been solid and reliable. So - if Dell gets bought out and goes down the tubes - what companies to /.ers recommend for an SME that wants the things to "just work"?
Enjoy life! This is not a dress rehearsal.
Why do they still keep selling laptops with utter crap HDs in em.
First hour I get a cheap laptop home (im not paying 2k dude) I get my $99 hybrid or ssd drive out and clone the internal HD to that, then put it in.
I dont want a crap 1tb SLOW ass drive, id be happy with just 256gb SSD, or 500gb hybrid. Want more space? Get an external, you arent going to watch 5 weeks of movies unless your shipwrecked.
Liberty freedom are no1, not dicks in suits.
I stopped purchasing Dell machines for our company years ago. Their support is lackluster, most timed not understanding the person in India.
HP has been a much better support service to our company.
PlanetMoney did a show about Bain's investments and highlighted both a success story and a failure story.
IMHO, Bain made out really well both times, but the problem was that they made out even when the compan(ies) they were buying/merging did really poorly, and Bain made out primarily based on the heavy debt burden they placed on the companies they bought.
The script seemed to be:
1) Buy Company -- adding debt
2) Borrow for acquisitions/mergers -- adding debt
3) Pay Bain first. A lot.
4) Add more debt and companies (optional)
It struck me that the calculated strategy of Bain either worked or it didn't, but regardless Bain got paid handsomely but was insulated from risk when it didn't work out.
The show did make a good point, which is fair to Bain, that if they're just saddling acquired companies with debt to pay themselves management fees, why do banks keep loaning them money? If all they ever did was get paid and destroy businesses, banks wouldn't loan them money.
The program didn't' say this, but it may be that Bain is in league with the banks and that the loans are structured in a way that even when the companies saddled with them default on them that the banks don't really lose money (ie, high fees paid up front for the loans) or there is some kind of asset made a collateral for the loan which protects the bank from incurring real losses.
My guess is that there's some of that, but that more generally Bain does win more than they lose and that this is reflected in their ability to raise capital.
what happens to Dell services and parts for laptops and warrantees if the buyout occurs, I've been interested in getting a Dell laptop because of their onsite customer service?
The legacy is what matters - did you really innovate? I think someone like Torvalds or Sergie Brin runs circles around marketing guys like Dell and Jobs in that regard.