Dell Receives Another Stake Offer - Analyst Blog
26 März 2013 - 3:41PM
Zacks
A special committee formed by Dell Inc. (DELL)
recently announced that a “go shop” period has been awarded due to
the merger agreement between Dell and entities owned by Michael
Dell. Two proposals were submitted to the special committee, one by
fund manager Blackstone Group (BX) and the other
by entities of activist investor Carl Icahn. The shares of Dell
responded positively and have moved up.
The Special committee comprises four independent directors.
After detailed discussions with independent financial and legal
advisors, the committee concluded that both proposals had the
credibility to result in deals in accordance with the terms of the
existing merger agreement.
Michael Dell's $24.4 billion takeover bid is now in jeopardy
because of the higher prices being offered by the prominent
investors. Billionaire Carl Icahn is ready to form an alliance with
Blackstone Group LP in order to take control of this leading
computer maker away from its founder.
Icahn has reached a conclusion after completing its discussion
with Blackstone, after the bids have come from the other parties in
the deal, to put some amount on the table from Michael Dell and
private equity firm Silver Lake Partners LP. This new joint bid
offers much more return to the shareholders. The new bids are far
better for shareholders compared to the offer made previously.
The inclusion of the third party has been approved and
materialized by the special committee. The success of the company’s
go-shop process has yielded two alternative proposals, which have
the potential to create additional value for Dell’s
shareholders.
Although privatization might have helped Dell move away from
public scrutiny, the go-shop period has raised new problems for
founder Michael Dell. It now appears that privatization could take
some time because of the interest generated by outside parties.
This apart, the ever-increasing competition from companies such
as Lenovo, Asustek, Apple Inc.
(AAPL), IBM (IBM),
Hewlett-Packard (HPQ), and Cisco
Systems (CSCO) has restricted Dell’s growth prospects.
These players are growing at a faster rate than Dell, even in the
emerging markets. We are also concerned about the conservative tech
spending, continued weakness in the PC market in 2013, declining
revenues and competition from its peers.
Currently, Dell has a Zacks Rank #3 (Hold).
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