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Rival Dell Buyout Plans Duke It Out

Posted by samzenpus on from the last-bid-standing dept.

jfruh writes "Michael Dell's plan to take the company he founded private, with help from Microsoft, isn't going smoothly. Corporate raider and major Dell stockholder Carl Icahn has presented a rival plan that would shut Michael Dell out. Perhaps predictably, the Dell board isn't sold on Icahn's idea, saying it will leave the company short of cash, even though they haven't been able to fully evaluate it yet."

17 of 59 comments (clear)

  1. Icahn is bluffing by JoeyRox · · Score: 4, Insightful

    He has no interest in the company - he just wants a quick payday. Problem for him is nobody is really that interested in Dell, so his machinations aren't going to work this time. It's comical that he thinks the company is worth north of $20/share.

    1. Re:Icahn is bluffing by game+kid · · Score: 5, Funny

      "Why am I making such a big offer for Dell that would drive out Mr. Dell? Because Icahn."

      --
      You can hold down the "B" button for continuous firing.
    2. Re:Icahn is bluffing by Penguinisto · · Score: 5, Informative

      Exactly. A quick look at his little history (especially with Yahoo a few years back) shows that he's only in it to score some meat from a dying company while the victim is still breathing. Notice that he doesn't really go after healthy, growing companies - only those which show signs of being in serious trouble.

      I suspect that if you work for a larger company? A perfect indicator of your corp being in deep kimchi would be the presence of Carl Icahn's active attempts at your company's financials... it's like seeing the Angel of Death, only he's going after the board of directors.

      --
      Quo usque tandem abutere, Nimbus, patientia nostra?
    3. Re:Icahn is bluffing by alen · · Score: 5, Insightful

      the original premise behind private equity was to buy a down on its luck company, fix its problems and get it profitable again. then sell it and pocket the profit on the real effort you did.

      today's version is to buy up a company with low debt and strong cash flow, saddle with debt, take the cash and run. management and shareholders like it as well since they get paid too

      buying up healthy companies screws the employees

    4. Re:Icahn is bluffing by mabhatter654 · · Score: 3, Informative

      Or in this case, Dell buys ITSELF back from stockholders "at large" and gets to decide who plays. So they can run the company without month-to-month dealing with these frivolous stockholder games.

    5. Re:Icahn is bluffing by Chris+Mattern · · Score: 2

      They also save a nice bundle of tax money. Profits that are paid out to shareholders in dividends have to have income tax paid on them by the corporation, and the shareholders then have to pay income tax on those dividends themselves. Interest on debt is an expense and the corporation doesn't pay tax on it (although the debtholder still does when he collects it).

    6. Re:Icahn is bluffing by phantomfive · · Score: 2

      It's comical that he thinks the company is worth north of $20/share.

      If you look at the cash and assets that dell has saved up, Dell is worth $20 a share, even if they don't sell another computer ever. That is why it is worth so much.

      --
      "First they came for the slanderers and i said nothing."
    7. Re:Icahn is bluffing by Bigby · · Score: 2

      The total equity for the company is $10.7B. It has grown steadily $1.2-2.2B per year. Both debt and assets are increasing at a steady pace, but assets are outpacing debt.

      $10.7B/1.75B shares ~ $6/share. How is it worth $20/share? On top of that, their assets are as valuable for someone else as they are for them, AT BEST.

      Also, the 1.75B probably doesn't include all shares...

    8. Re:Icahn is bluffing by David_Hart · · Score: 2

      Exactly. A quick look at his little history (especially with Yahoo a few years back) shows that he's only in it to score some meat from a dying company while the victim is still breathing. Notice that he doesn't really go after healthy, growing companies - only those which show signs of being in serious trouble.

      I suspect that if you work for a larger company? A perfect indicator of your corp being in deep kimchi would be the presence of Carl Icahn's active attempts at your company's financials... it's like seeing the Angel of Death, only he's going after the board of directors.

      This happened at the company that I work for. The company had some serious business issues that drove our stock down. We would have recovered but Icahn came in, worked to get members on the BOD, and sold us off to another company. In our case, it actually worked out well as the company that purchased us badly needed diversification and kept most employees on and the division intact.

      Two pieces of advice: 1. If Icahn comes calling for your company, buy up as much stock as possible, especially if you have an ESPP program. 2. Make sure your resume is up to date as your company will be sold.

  2. all about the $$$ by ganjadude · · Score: 4, Interesting

    I dont think he has any real interest in buying the company. I think he is trying to leverage a higher payout on his shares in the end. Cant blame him for wanting to maximize his cash but he is really acting like a dick

    --
    have you seen my sig? there are many others like it but none that are the same
    1. Re:all about the $$$ by ganjadude · · Score: 2

      well the company is DELL computers... if michael DELL wants to own his own company, i dont see how thats him being a dick... its his company, and its named after him....

      --
      have you seen my sig? there are many others like it but none that are the same
  3. conversation: by WilyCoder · · Score: 4, Funny

    Icahn to Dell: "Dude, you're not getting a dell"

  4. Re:Not supposed to do that? by Anonymous Coward · · Score: 3, Funny

    Oh, you believed his promises? What next, you're going to marry a prostitute and rebuild a shipyard to make up for the fact that you've spent your life raping the world?

  5. Re: Purely Self-Serving by rudy_wayne · · Score: 4, Insightful

    Whether Michael Dell can succeed is a different matter, but he will try to turn the company around. .

    Whether or not Michael Dell will successfully turn Dell around is not the question. The question is, why hasn't he done it already since he's been CEO for about 7 years. If he hasn't been able to do it in the past 7 years, why would the next 2 or 3 years be any different?

  6. Re:He just wants a free company by rudy_wayne · · Score: 2

    Icahns offer works out at $12 a share, lower than Dells offer.

    http://www.engadget.com/2013/05/10/dell-icahn-southeastern-counteroffer/

    "Carl Icahn and Southeastern Asset Management have both opposed the $24.4 billion / $13.65 per share buyout proposal from the start and have an alternative proposal: a $12 per share dividend, funded by Dell's $9 billion in cash and $5.2 billion in new debt."

    So his pitch is:

    Shareholders give him the company and its cash.
    Icahn hands back the cash part, borrows some against the company part and hands that back.
    He gets company for free.
    Profit (but for Icahn not for you)

    I'm not an expert in corporate finance, but this doesn't add up. Under that plan, Icahn gets Dell, but Dell no long has any cash because Icahn spent it all paying out the dividend to shareholders and Dell is $5 Billion in debt (the amount borrowed to pay the rest of the dividend to shareholders). I see no "profit" for Icahn in this unless he chops up Dell and sells it off (which is what often happens n these type of deals).

  7. Re:He just wants a free company by the_B0fh · · Score: 2

    1) He is part of the shareholders (12% to 20% ownership - large chunk of cash right there)
    2) You just answered your own question. He's already selling off Accounts Receivables.

  8. Baloney. Icahn is nothing like Bain. by jensend · · Score: 2, Insightful

    Right, "broken companies" like Staples, Sports Authority, Domino's, Experian, etc etc. Oh wait, all of those are doing a heck of a lot better than they were before.

    Bain took risky buys, companies that were failing, and turned a healthy number of them into successes. Not all their buys worked out but you don't blame the doctor by complaining that his patients have all been sick.

    You know, Obama won the election; you can quit with the falsehoods and slander already as it doesn't serve any purpose any more.