Despite Dell being the third largest PC vendor in the world, they haven’t been having the best year as of late. Personal computer sales have been slipping in the past year or so as (relatively) cheaper tablets are on the rise, and Dell has dabbled with venturing into new technology to improve their brand and diversify. It turns out that’s difficult when being a publicly traded company, because investors justifiably fear any sort of change when their money is involved.
CEO Michael Dell had just the idea to allow the company to re-invent itself without sweating outside factors: in a partnership with Silver Lake, a private equity firm, Dell would become a private company, made possible with a loan from Microsoft in the amount of $2 billion. The deal would be worth around 6% of Dell’s capital, or $24.4 billion, and would give stockholders $13.65 per share in Dell’s final foray as a public company. That was the plan anyway, until it was met with protest.
It was reported on Friday afternoon that Southeastern Asset Management, Dell’s largest independent shareholder with an 8.5% stake in the company, sent a letter to Dell’s board expressing that they thought $13.65 per share from the buyout is was not good enough. They valued the shares around $24.00 per, about where they were about five years ago. Southeastern also mentioned there were other ways Dell could go about doing the buyout to provide more money for shareholders, such as selling the company for parts after breaking it up.
It’s unclear where the buyout will go from here, but it’s a major hurdle for Michael Dell’s plans. The terms of the buyout dictate that a majority of shares not held by Michael Dell must agree with the buyout for it to go through, and as of the time this article was written 11% of non-Dell shareholders oppose the deal. Zing Blog will update more as it develops, but in the meantime, what do you think of the $13.65 offer presented with the original buyout? Is that fair to shareholders?