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

Providing a secure and efficient Helpdesk

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. ®

Providing a secure and efficient Helpdesk

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Special pleading against mass surveillance won't help anyone
Protecting journalists alone won't protect their sources
Big Content Australia just blew a big hole in its credibility
AHEDA's research on average content prices did not expose methodology, so appears less than rigourous
Vodafone to buy 140 Phones 4u stores from stricken retailer
887 jobs 'preserved' in the process, says administrator PwC
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
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?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.