What do you think might happen with this deal now? I own few call options 13.5
If you have been in leveraged buy out and there is opposition, what happens usually? Does the deal gets sweetened or the deal may go away?
Please share what you think...!
I'm going to do three things:
1. I have joined one of the lawsuits claiming insider malfeasance.
2. I will vote my shares NO. (Why would anyone in their right mind agree to seel at a loss, for pennies on the dollar, when the company is making money, and has initiated moves to improve earnings going forward?).
3. I will vote AGAINST Mr. Dall and every member of the BOD for trying to screw me like this.
Due to the significant gap between the current LBO price and Southwestern Group's cost basis, there is no way the LBO group can raise the price enough to satisfy Southwestern Group. One scenario I think can happen is to let Southwestern Group to swap its stock holding to get a stake in the private Dell, while sweeten the deal a little to mollify the others smaller institutional and individual stock holders.
No small holder or individual investor will agree now for less than $18/share, because now they have seen estimated value from large holders. Large holders have their analysts who can figure out share value estimate much better than public shareholders. Actually by lowballing this offer, Dell has no choice but to increase offer now or face a NO vote.
The stock will trade slightly above the current offer with volatility within a tight band. No one will bid during the go-shop period. The offer will be restructured in order to sweeten the offer to induce a significant part of the opposition to fold and will close in the August time frame at a price in the $15.50 range
I plan to vote no until a much better offer surfaces and I think the Southwestern letter will rally the support of many shareholders who think this is a pretty bad deal even if it's supposedly 25% above the price when rumors started. Michael Dell is not looking out for investors, as if he was he'd give an option to shareholders who want to stay in after the LBO to retain their shares. He could have also simply continued executing his plan as a public company that he boasted would boost revenues by 2015 and not try to gain more control of a private company. Nobody would boost their stake of a company that is in decline - he definitely sees a turning point where the company will make more money than previously and start gaining traction in the corporate sector that IBM dominates. The stock has a floor now of 13.65 - and it will go up in anticipation of a better deal.
The current $13.65 buyout offer is structured so that stockholders choosing to not cast a vote will be considered a "NO" vote. Above all else, that will be the determining factor casuing the current offer to fail and Dell will remain a public company.
Mike Dell tried to do the right thing here, and give stockholders an exit at a nice premium valuation. But if the stockholders don't want to vote for it, and take the deal, Mike Dell is fine with reorganizing Dell as a public company. If and when the stock trades down to $6, $7, $8 per share he can buy more shares at that time. And the stock price will get down that low, because the process of selling off assets, building new business divisions etc... takes time, money, creates uncertainty and some short term bottomline losses. Wall Street doesn't like that, and will sell off the shares for the next few years until Dell can start to gain some traction as a transformed company.
Bashford - It is perplexing to me that you agree that $13.65/sh. fairly values Dell. Having followed the statements of Mason Hawkins for many years, and recognizing that he has deep experience in valuing firms, I can not understand why shareholders should not demand a $5 - $6 special dividend, a Dutch auction or some other mechanism by which @ $20/sh could be realized. How the BOD approved this is baffling, and, ostensibly, a conflict of interest.
" M. Dell tried to do the right thing "......Are you high on STUPID sauce? M. Dell is looking out for himself you IDIOT.
Shareholders WILL vote NO and since M. Dell already said that he would increase revenue by 40% by 2015 I think I will just wait for that day and a $30 price. The company is already on the mend and hit bottom, it's all gravy from here and Dell knows it, that's why he WANTS IT ALL.
I hope this helps your blind ignorance.
This will get ugly in the end. Institutions will not allow someone to steal their assets and they have to book their loss and explain what's going on to their clients. Proxy fight is very likely. Price will trade around 13.65 and up and down in near term with any rumors such Oracle is stepping in or Silver Lake walks or M Dell drops the offer. It will last at least 1-2 years. Meanwhile, company will be broken and employees will leave, skeleton will be left.
Dell will issue an official statement that their are no higher bidders and they stand by their price (Note, even a 10 cents in share price increase will increase by hundreds of million dollars). Stockholders will vote and if it fails, Dell will remain public for another 2-3 years and Dell will try to buy it again at a lower price. This will be the same problem with Yahoo and MSFT buyout