Dell to Go Private in $24.4 Billion Deal
February 6th, 2013Disclosure: I’m long Dell (DELL) from $12.66.
I don’t understand what all the bitching and moaning is about; unless these fund managers still believed in buy-and-hold and bought Dell in the high teens. These guys sound like a bunch of old farts in a Las Vegas bingo lounge, complaining about not being served enough cocktails.
Via: Reuters:
Some fund shareholders of Dell Inc said they were outraged by company founder Michael Dell’s plan to take the computer maker private for less than $14 a share, accusing him of effectively trying to steal the company.
With Dell trading at a low valuation relative to other technology companies, the board of directors should not have approved a leveraged buyout at that price, they said. Dell is paying $13.65 per share in cash for the stock, which ended on Tuesday at $13.42, up 1.1 percent.
“Do the directors think Michael Dell is crazy and shareholders are lucky to lose their ownership to him?” asked Frederick E. “Shad” Rowe, general partner of Greenbrier Partners and a trustee of the $22 billion Texas Employees Retirement System. “Or do they think that the plans and projections make sense and they’re leaving shareholders in the dust?”
Rowe said he dumped about 400,000 shares of Dell on Tuesday. “I was so irritated I didn’t want to think about it anymore,” he said.
The $24.4 billion deal, which requires shareholder approval, would end an almost quarter-century run on the public markets for a company that was conceived in Dell’s college dorm room and quickly rose to the top of the global personal computer business – only to be rendered an also-ran over the past decade as PC prices crumbled and customers moved to smartphones and tablets.
Dell executives said the company will stick to a strategy of expanding software and services offerings for large companies, with the goal of becoming a full-service provider of corporate computing services in the mold of the highly profitable IBM . They downplayed speculation that Dell might spin off the low-margin PC business on which it made its name.
But some investors were not interested in pronouncements on strategy.
“This price is ridiculously low and looks like Michael Dell and all are trying to steal the company from shareholders,” said Bernard Lanigan, who runs a wealth management firm in Thomasville, Georgia, that owned Dell shares. “We cannot believe the board would allow this inside deal at this low price.”
