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Two Outside Bids For Dell Threaten Founder's Buyout Plan
An anonymous reader writes "Seven weeks ago, Dell announced a definitive agreement to be taken private by a group led by founder and CEO Michael Dell and the private equity firm Silver Lake Partners, assisted by a $2 billion loan from Microsoft and debt financing from a group of big banks. The deal was valued at $24.4 billion ($13.65 per share of Dell common stock), but allowed for a 45-day "go shop" period for alternative bids to be submitted to a special committee of Dell's board. Not all large shareholders were happy with the price, and early this month billionaire investor Carl Icahn threatened to tie up the buyout in court unless a large special dividend was paid to shareholders — without showing interest in buying the company himself. More recently, the private equity firm Blackstone Group jumped into the fray, and by Friday night's deadline both Blackstone and Icahn had submitted bids for Dell exceeding the original $13.65 per share agreement. Blackstone is said to be interested in installing Oracle's Mark Hurd as CEO, replacing Michael Dell. As Hurd was fired as Hewlett Packard's CEO in 2010 for alleged sexual misconduct involving an outside consultant named Jodie Fisher, he might have difficulty landing another CEO job at a publicly traded company; the Dell position could be an intriguing fit for both sides."
"Hurd was fired as Hewlett Packard's CEO in 2010 for alleged sexual misconduct involving an outside consultant named Jodie Fisher."
As I recall, Hurd was not fired only for the sexual misconduct, but the falsifying of expense reports and other misuse of corporate money to cover up the affair. Sleep with whoever you want, but when you steal company money, you're gone.
http://www.huffingtonpost.com/2010/08/06/hp-ceo-mark-hurd-resigns-_n_673858.html
AFAIK the major difference between European and US style options is that US options can be sold at any time up to the expiration, while European options can only be sold at expiration. So US options are much more flexible. Thus I don't know why Icahn would use European options.
Example: FOO (ticker for FooCo) is trading at $10. I buy an option to buy 100 shares of FOO at $10 six months from now, and I pay $.10 per option. I'm betting that FOO will be worth more than $10.10 in the next six months. For example if FOO goes to $10.50 I my option is now worth $.40 so I can make $.30 = 3 times my money. That's the basics of a 'call' option. (If the stock doesn't go up, the option expires worthless after six months, and I'm out the entire $.10 per share.)
But let's say after 3 months, while the stock is is now $10.20, there's a cloud on the horizon. I think before the six months is up the stock will be back down below $10, making my option worthless. In the US I can sell my option immediately, making only $.10 but avoiding the predicted loss of the entire $.10. In Europe I can not do that, I must hold the option until the bitter end.
Note: options give the opportunity to make a lot of money, but also the opportunity to lose 100% of your investment. Some options ('puts' - selling short) have the opportunity to make a lot of money but the opportunity to lose several, or many, times your money - you have an unlimited risk.
It's been a while since I was into this and I never was particularly good at it so I may have some details wrong but I think I have the gist.
It's easier to be a result of the past, but more fun to be a cause of the future! http://www.spacefinancegroup.com/
Nobody is going to invest Billions in a company only to see it dismantled
That's exactly what they do. Buy it up, run up a massive debt which is used to pay out the equity firm and shareholders and then leave the smoking corpse massively in the hole while they walk away with the profits. And once it's a private company again the books are no longer public so its easy to hide the financial situation until they have finished sucking it dry.