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

Internet Security Threat Report 2014

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. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
Bono apologises for iTunes album dump
Megalomania, generosity and FEAR of irrelevance drove group to Apple deal
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Apple SILENCES Bose, YANKS headphones from stores
The, er, Beats go on after noise-cancelling spat
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
Zippy one-liners, broken promises: Doctor Who on the Orient Express
Series finally hits stride, but Clara's U-turn is baffling
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
America's super-secret X-37B plane returns to Earth after nearly TWO YEARS aloft
674 days in space for US Air Force's mystery orbital vehicle
10 Top Tips For PRs Considering Whether To Phone The Register
You'll Read These And LOL Even Though They're Serious
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.