Depressing Dell makes private case
Dell has painted a sorry picture for its business prospects, offering its strongest case yet for accepting a US$24.4 billion offer to go private.
The 274-page proxy statement, filed with the U.S. Securities and Exchange Commissionm relates to the proposed acquisition of Dell by affiliates of Silver Lake Partners and current CEO and founder Michael Dell.
Arguing his own company would need a drastic remake to compete in a struggling industry, Michael Dell believes the $13.95-a-share offer set in place is justified for the struggling company.
Yet many major investors oppose the deal, believing the company is worth much more. And given Michael Dell's unusual predicament of being on both sides of the fence, a cheaper deal would be seen in his interest.
But with Carl Icahn and Blackstone Group bids also on the table, the buyout deal is turning into more of a high-stakes game of poker rather than a potential business venture.
Under the headline, 'Seeking the Best Outcome for Dell Shareholders', the proxy offered grim viewing for investors.
"Having conducted a thorough review of Dell’s challenges and opportunities, we remain convinced that the risks and uncertainties of a stand-alone public company are high," it read.
"The current Silver Lake and Michael Dell transaction delivers $13.65 per share in cash – a 37% premium to Dell’s 90-day average price and a 25% premium to the unaffected price prior to reports in the media about the proposed deal.
"We believe that this significant, immediate and certain premium offers superior value to owning Dell as a stand-alone entity today."
But while Michael Dell, who was unavailable for comment according to the company, seemed willing to seek alternative deals, it would appear his focus lies purely on the Silver Lake wager.
"Michael Dell has confirmed his willingness to explore participating inalternative acquisition proposals," it read.
"However, there can be no assurance that either non-binding alternative acquisition proposal will ultimately lead to a superior proposal."
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