At this point it is pretty much guaranteed that you already know about the Dell buyout. Dell has since officially confirmed that the buyout is a go, and even Microsoft threw in $2 billion to help the deal go down, though the majority of the backing outside of Michael Dell comes from the Sliver Lake private equity firm.
So is this a done deal, 100%? Actually no, Dell and any party involved still has until November 5th of this year to call the whole thing off. Additionally, new trouble is brewing in the form of a lawsuit.
The buyout at $13.65 per share is undervalued substantially, according to a newly filed class-action lawsuit filed to present all Dell shareholders. The total buyout price is around $24.4 billion. While not all shareholders officially feel this way yet, enough were angered by the move to form a lawsuit.
The biggest issues at stake, according to shareholders involved, is that the specifics of the deal are lacking, making it hard for them to fully determine if the price was fair or not.
The lawsuit in the Court of Chancery in Delaware further states that the deal is timed to take the company private right before it truly capitalizes on a move into the high-margin software business.
“By engaging in the going private transaction now — in the midst of the company’s transition from a PC vendor to full service software and enterprise solution provider — the board is allowing defendants M Dell and Silver Lake to obtain Dell on the cheap,” further states the lawsuit.
Is this lawsuit troubling? Not necessarily, more like expected. Any time a major merger worth this kind of cash shows up, there is generally a lawsuit filed to block, review or revise it from going through. In most cases these lawsuits settle without too much trouble.
That said, the door has been opened to other potential buyers. In anticipation of resistance to the deal from stockholders, Dell has stated that other potential buyers will now have 45 days to submit higher bids for their consideration.
I am of the personal opinion that everything will settle and go through, but just about anything can happen in these kinds of situations. Ultimately, I’m still not sure if going private will turn into a great move for Dell or not, though it will certainly give them more freedom of direction going forward.
What do you think of the buyout, do you believe that shareholders are getting “robbed” at an unfair sale value or not? Share your thoughts below.[ source ]