Dell worlds third largest maker of PC's is in talks to sell itself to a consortium of buyers led by Michael Dell (Founder & CEO), Silver Lake Partners and Microsoft. The deal might be in the stock price range of $13 to $14.5 and would value company in the range of $22 billion to $24.5 billion. The deal might finalise in the first or second week of February, but speculation indicate it as early as Monday, 4 February. With the privatisation Michael Dell will be the majority share holder, where as Silver Lake and Microsoft will be minority shareholders.
The Consortium has secured a debt of $15 billion to finalise the deal from various Investment Bankers such as Barclay's, Bank of America, Merrill Lynch, etc.
Dell's going private what are the pros and cons of such an act:
Going private would allow Dell, a smoother transition from a PC maker to a One-Stop Shop for Enterprise Solutions. Transition requires taking risks, but as a public company it might not be able to take risks, as they might lead to a short term hit on revenues and profits. But, would the competitors(IBM, HP, Cisco, etc) sit quite, they would be aggressive than Dell and this might be cause of concern for Dell
The reporting requirements and restrictions (such as SOX, GAAP, etc) are reduced and would help it in making aggressive decisions on acquisition, mergers and any part sales.
Dell will get rid of massive costs that cover legal and compliance, which are mandatory for a public company.
Avoiding public scrutiny (Investors & Regulators) has its additional advantage, it can concentrate on its core customers or potential customers and streamline its operations towards achieving those goals, which usually require long term planning.
In future, if Dell decided to go public again, the current changes would make it much leaner and meaner (in terms of competitive advantage, relationship & agility) organisation than what it is now.
Dell is taking a huge debt to go ahead with privitisation, this debt might become a burden if things didn't turn out well for it.
The Consortium has secured a debt of $15 billion to finalise the deal from various Investment Bankers such as Barclay's, Bank of America, Merrill Lynch, etc.
Dell's going private what are the pros and cons of such an act:
Going private would allow Dell, a smoother transition from a PC maker to a One-Stop Shop for Enterprise Solutions. Transition requires taking risks, but as a public company it might not be able to take risks, as they might lead to a short term hit on revenues and profits. But, would the competitors(IBM, HP, Cisco, etc) sit quite, they would be aggressive than Dell and this might be cause of concern for Dell
The reporting requirements and restrictions (such as SOX, GAAP, etc) are reduced and would help it in making aggressive decisions on acquisition, mergers and any part sales.
Dell will get rid of massive costs that cover legal and compliance, which are mandatory for a public company.
Avoiding public scrutiny (Investors & Regulators) has its additional advantage, it can concentrate on its core customers or potential customers and streamline its operations towards achieving those goals, which usually require long term planning.
In future, if Dell decided to go public again, the current changes would make it much leaner and meaner (in terms of competitive advantage, relationship & agility) organisation than what it is now.
Dell is taking a huge debt to go ahead with privitisation, this debt might become a burden if things didn't turn out well for it.
In first week of Feb, Value of take-over was estimated at $22 to $24 billion but looking at delays and opposition this might even touch $30 billion.
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