Sunday, April 7, 2013

Battle for Dell risks customer confidence, analysts say

With Michael Dell still battling to get his US$24.4 billion buyout deal approved by shareholders, his company needs to avoid a long, drawn-out battle that could erode customer confidence, analysts say.

Dell recently released details about counteroffers to the proposed purchase by Michael Dell and equity investor Silver Lake, who have offered $13.65 per share to take the company private. The deal was announced February 5, and several counteroffers are pending.

Some signs suggest the proposed deal could fall apart, with some big Dell shareholders, including Yacktman Asset Management and Southeastern Asset Management, opposing the buyout on the grounds that it undervalues Dell.

Counteroffers include a proposal by equity firm Blackstone Group, which approached Southeastern Asset Management and TPG about possible alternative bids. The current offer by Silver Lake and Michael Dell included a $2 billion loan from Microsoft, and debt financing commitments from Bank of America, Merrill Lynch, Barclays, Credit Suisse, and RBC Capital Markets.

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