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Dell Confirms and Details Rival Bids From Blackstone and Icahn
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."
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.
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/ 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.
Those who can, do. Those who can't, sue.
I don't know what his plans might be, but there's a world of difference between publicly traded and privately held companies. There are a whole slew of constraints on what a public company can do, between regulations and notions of 'fiduciary duty'. Not to mention the obligatory lawsuits every time the stock price dips. I think we can expect to see more and more companies going privately held when large changes need to be made.
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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.
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.
Apple develops their own CPUs?
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.
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.