Original URL: http://www.theregister.co.uk/2013/07/08/michael_dell_wont_up_dell_offer/

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

By Brid-Aine Parnell

Posted in Business, 8th July 2013 10:19 GMT

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. ®