Today investor Carl Icahn surrendered his bid to take Dell partially private in a leveraged buyout. Instead, Michael Dell, the company’s founder, will now certainly win in his efforts to take Dell private.
It’s been a long, arduous journey. Dell as a company is in a rough time of its history, as the PC market contracts, it deals with painful margin pressure, and competition in the services sector that could help it grow its aggregate revenue.
The conventional wisdom is that Dell needs to go private for a period of time to rebuild its business apart from the pressure of short-term market demands.
Icahn was blunt in his assessment of the situation: He believes that Dell and his partner Silver Lake are paying far too little for the company, partially because they are “paying a price approximately 70% below [Dell's] ten-year high of $42.38.” He also stated that the deal ends the potential for a higher bid.
Icahn discussed and proposed a tender offer for most of Dell’s stock. However, his plan didn’t provide for a fully private Dell, thus not allowing for it to dodge quarterly earnings complaints. But it would have enriched Icahn, given that it would have greatly raised the per-share income for Dell stock, which he would continue to hold.
Though Icahn is going away, he is also going away mad:
We jokingly ask, “What’s the difference between Dell and a dictatorship?” The answer: Most functioning dictatorships only need to postpone the vote once to win.
All right, Michael, your baby is now yours. Show us what you can do.
Top Image Credit: Oracle PR