Slashdot Mirror
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.'"
...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.
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
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.
Alienware is not about paying 500 dollars just for a fancy LED on your case. Don't be ridiculous.
Alienware is about paying 500 dollars for a totally ridiculous-looking case, which includes a bunch of fancy extra LEDs.
A Dell - Rolling in the deep.....
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?
Admittedly, it was cool back in 1998 at the LAN parties - but only if you soldered the little bastard on yourself.
Same with the lucite case window, the jerry-rigged liquid cooling system, the LED lights inside, the massive power supply, and the ginormous fan bolted on the side - just to make it look as if your bargain-basement system actually needed the same CFM rating as a Peterbilt radiator fan**.
'course, those days are long-the-hell gone, but I'm man enough to admit that I got into it once. I'll even admit to a twinge of nostalgia when I think about it.
** true story - I bolted an old 12" Amstrad cooling fan onto the side of a case once, just to see my old LAN buddies' eyes pop out. At 110VAC (1/2 the rated voltage), it ran whisper quiet, but having to find an extra plug was a bitch sometimes.
Quo usque tandem abutere, Nimbus, patientia nostra?
I think you are missing an important point – the Private Buyout Firm is the shareholder – they have bought out all of the other shareholders – hence the name.
The shareholder can’t sue themselves – so that’s out. If the firm goes bankrupt – the buyout firm loses their money, etc. (And contrary to popular belief they do have to put up a good chunk of change upfront.) The Buy Out firm wants the company to succeed. (There is a sub-class of Buy Out firms called vulture funds which dismember zombie firms – but that is another story.)
I think you are trying to zero on the fact that buy out firms prefer risker adventures – go big or go home. Bigger rewards but a bigger chance that one of the firms that purchased will go bankrupt.
If there is a Microcenter near your town you can build your own for cheap. My exgf was poor and needed a new computer several years ago. I had an older 4 year old system lying around so I took the board and video card out and went to Microcenter and built blue led neon lamps and a wicked looking case for $140 and a PSU.
Little did she know she was running on an older 4 year old system but all she did was type papers and IM friends. You do not need a monster computer anymore unless you run Gentoo :-)
http://saveie6.com/
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.
A takeover or merger works when company A offers to buy company B. Company A can offer some combination of stock in the new company, cash, or debt (less popular now). Company B then decides to take the deal or not.
So, let’s be specific. Private Equity firms tend not to have stock so they tend to offer cash. Dell is currently trading at $12.50 so they would offer more – let’s say $15 to $20 per share. The Dell Board has 3 options.
First, they can accept the bid. All of the old shareholders hand over their shares for cash. The second option is to refuse the offer. There are a lot of reasons to reject an offer. However, if the Buy Out firm is offering a cash price higher than the current stock price it would be hard to resist – bird in hand vs. 2 in the bush type of logic. Or the board could try to find a different suitor.
The trick is that the board must consider everybody’s position. The CEO / founding family / majority shareholder can’t squash a deal just because they would lose control. In this way the minority shareholder’s rights are protected.
As an aside, as to somebody trying to get a 50% share of the company – that is frowned upon. If one can gain effective control of a firm, the effective value of your shares go up and the real value of the minority shareholders go down. Many countries have rules that if you get effective control of a firm you have to put forward an offer for the whole firm.
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?
Incorrect. Unless it reforms as a partnership, there will be shareholders. The shares simply won't be traded publicly.
I had horrible blue LEDs inside and on the front of the case. I couldn't sleep if I had to download something big. I eventually completely disconnected them.
Does it make you happy you're so strange?