Feeds

Big Mike's big package oughta be enough for Dell investors - report

Biz baron reckons he's stumping up plenty o' dosh for IT giant

High performance access to file storage

Tech tycoon Michael Dell and private equity partner Silver Lake won't sweeten their $24.4bn offer to take PC maker Dell private, whisper industry insiders.

Those sources, who apparently have direct knowledge of the situation, let Bloomberg know that Big Mike and Silver Lake aren't going to up their bid - and that's because the pair reckon their offer of $13.65 a share to buy out all the other Dell stockholders is a "fair and significant premium" on where the shares will be if the whole deal falls apart.

Mickey Dell's latest presentation on the proposed takeover, which is due to go to shareholder vote on 18 July, was filed on Friday and suggests that a rival bid by investor Carl Icahn and his partner Southeastern Asset Management overvalues how much the company is worth.

Icahn and SAM have insisted that Big Mike's deal undervalues the firm, which they reckon can still do well as an enterprise services company (think: cloud) instead of a PC maker.

But Dell's board has said that Icahn's assumptions about the firm put its valuation at 12 times its EBITDA (earnings before interest, tax, deductions and amortisation), way more than the value of its competitors. According to the presentation, Microsoft and EMC are trading at seven times their projected EBITDA, while Dell's enterprise business is valued by Icahn at more than 15 times its EBITDA.

"How can Dell be worth 12 times its EBITDA when its closest peer, HP, trades at 4.6 times EBITDA?" the presentation asks.

The firm also points out that if the shareholders reject Big Mike's deal, they're likely to see their shares fall far below what he's offering. Assuming stocks would drop to trading at the same multiples as HP, then they should be trading at $5.85 to $8.67 each, considerably less than the $13.65 offered by the eponymous chief. ®

High performance access to file storage

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Sorry London, Europe's top tech city is Munich
New 'Atlas of ICT Activity' finds innovation isn't happening at Silicon Roundabout
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.