I wonder how all those complaining about the $13.65 will feel if the deal doesn't get accepted and the stock goes back to $11 or lower? Everyone's acting like a hero...DEMANDING more for the deal NOW that the offer has been formally made. Hey, I was long, I wanted more as well!
I can tell you one thing. If I was the Dell or Silverlake I wouldn't dream of increasing the offer. Let the shareholders vote it down, wait for the stock to go much lower, and then come in with an even lower offer. You might want to take a look at what happened to YHOO when they got too cute with MSFT. How'd that work out for shareholders?
First, let me say that I hope you longs do get to ultimately make more money on your shares. I was long and I am now out. So I currently have no dog in this fight. However, if it does go significantly higher than the $13.65, I will be shorting it (hedged w/ calls).
Here's how I see it:
1) There is no reason for this deal to take place as far as long-term, on-controlling shareholders are concerned. The idea that the BOD is looking out for shareholders is laughable. If this deal is killed, the first order of business should be to oust the entire board since they voted unanimously for this horrible deal. I agree with longs and Southeastern that the BOD is not acting responsibly. I repeat: there is absolutely NO need to take Dell private! The few reasons given in articles are just silly and making stuff up. The stock was already smacked down. If a few more years of the stock being down is the price to pay for a potential turnaround and what could ultimately be strong gains for long-term shareholders - why should they not be allowed to do so? They took the risk and so far have paid the price. This deal pulls the rug out from under them and I can understand anyone who paid a higher price being very upset with this deal.
2) It is illogical for the buyers to suggest that the company is worth only $13.65 today - yet obviously think they will be able to get a solid return on their investment a few years from now. Huh??? lol. You can't have it both ways! If $13.65 will yield a good return for THEM, how could it not for current shareholders? This is why I think the "public stub" option that Southeastern mentions would have been the best way to go. This deal cuts out long-term shareholders from any future potential upside after they have already experienced the downside. That's disgusting. It was fine as long as Michael Dell was pulling out billions from the company, but now that they have sucked it dry they want to take it back from the public? Nuts.
3) This $13.65 offer could very well be a ploy by the buyers to start low and see what happens - but I wouldn't count on it. They might be thinking they'll lowball it at first, and if they can get shareholder approval, it's a great deal. Otherwise, they can come back AFTER and make another offer. But...they could also walk. Don't forget they are taking on significant risk that Dell will be able to execute, macro conditions, etc. Lots of assumptions that may or may not pan out.
4) Dell earnings are coming out soon and they will likely not be great. That will make their lowball offer look better (for the short term).
5) Southeastern can say that Dell is worth whatever they want. It does NOT make it a fact. There is no such thing as intrinsic value. It is subjective - not factual. It is based on many assumptions. I can say my home SHOULD be worth $1 million, but if the market is only willing to pay $400K, I have two choices: either sell at $400K or hold it until the market reappraises. I don't care if someone thinks Dell is worth $100 or $5. At the present time, the offer is $13.65. If it was such a steal at that price, are the other companies and investors of the world so incredibly stupid that they won't make a better offer? Of course not. They would/will step up and bid higher!
6) The deal should never have been allowed to get off the ground and Dell should be executing a turnaround strategy for the future (which it is well on its way of doing). This is not Michael Dell's private company. When he chose to go public, and become fabulously wealthy, he made a choice. He has reaped incredible rewards from going public - and NOW he decides he wants his company back? What a greedy, despicable man. His legacy? Hey Michael - take your legacy and shove it. Your ego versus millions of shareholders??? You pulled billions out of DELL. You OWE the public - not the other way around.
A decent man would be doing his best to turn around the company for the benefit of OTHERS (who he took money from) since he made many billions of dollars off of their backs. A good man would feel a sense of obligation to repay the public - he would not be looking out for himself. Honestly, being worth $20 billion isn't enough? What a loathsome creature.
Southeastern already said things they can do
declare $9 special dividend
break the companies and sell to strategical buyers.
PC and SMB Business - Lenovo, Asus, Acer
Server, Networking - Oracle, Cisco, HP, Huawei
Software - IBM Oracle HP Salesforce
There will be plenty options to raise the value to $13.65 easily (tender offer, increase dividend, shares buyback) if deal goes down. Not sure why you have to worry.
Also, Michael Dell will be the biggest loser if it goes down to $9.
If Southeastern thinks DELL is worth $24 dollars why doesn't Southeastern get some lending partners together and make an offer to buy the company for $24, or $20, or $16 per share?
The deal is wide open right now for anyone to come in and make an offer higher than $13.65.
Oh, that's right, talk is cheap and there will be no offer from Southeastern. Money talks, #$%$ walks.