A Timeline of the Ongoing Dell Buyout Saga

Jacob Harper |

On July 16, Dell Inc’s (DELL) stock dropped on news that the stockholder vote on CEO and founder Michael Dell’s privatization plan would be delayed by the committee set to vote on his offer.

The vote delay is the latest twist in an ongoing, contentious battle to control the future of the PC company. Michael Dell, who founded Dell in his dorm room at age 19, has found an aggressive rival in his quest to re-privatize his own company in billionaire investor Carl Icahn, who is trying to keep the company on the open market.

The two parties have been going back and forth for awhile now, and the story has had more twists and turns than a soap opera. Below we’ve provided a “previously on” to get you caught up with the epic war for control of one of the biggest computer companies on the planet:

February 5 2013: Michael Dell - in conjunction with equity firm Silver Lake - makes an offer to take the company private for $24.4 billion. Dell argues that taking the company private it will give the company “more time, investment and patience” to turn things around. Dell has fallen from the world’s number one PC maker to the world’s number three, sagging behind Hewlett-Packard (HPQ) and Chinese company Lenovo. Dell’s offer puts the company’s value at $13.65 a share.

March 23 2013: Two other groups make on offer on Dell. Blackstone Group LP (BX) submits an “indicative and preliminary” offer of between $13.65 and $15 a share. Blackstone begins soliciting investors, and hints they’ll raise the capital by selling a chunk of the company.

Simultaneously, billionaire investor Carl Icahn makes an offer of an undisclosed amount for the company.  

April 18 2013: Blackstone’s offer, which reportedly would have kept the company public and given shareholders the option to “cash out or stay in” is withdrawn. The deal would have been for around $25 billion. Dell had said he’d only support the Blackstone offer if he got to remain CEO, while Blackstone seemed to be interested in removing him. Blackstone cited the declining PC business as its official reason for getting out.

May 10 2013: Icahn and major Dell investors Southeastern Asset Group unveil an aggressive buyout offer of $21 billion in cash to stockholders. The deal would give Dell shareholders $12 a share and allow them to keep their stock. According to Icahn, the expensive deal would be financed with existing cash and about $5.2 billion in new debt.

July 8 2013: In a major blow to Icahn, influential advisory firm Institutional Shareholder Services recommends that investors accept Michael Dell’s offer over Icahn’s. Though Icahn’s offer is for more money, the advisory firm questions the soundness of Icahn’s decision to take on so much debt. The advisory firm also gave a vote of confidence in Michael Dell’s ability to turn the lagging PC business around.

July 12 2013: Icahn sweetens his offer by planning to add a warrant to his existing $14 a share offer. The warrant, which Icahn says is worth up to $4, would give Dell shareholders the right to buy a Dell share for $20 within the next seven years for every four shares they tender to his offer.

Dell stock dropped on the offer, suggesting investors had little enthusiasm for the Icahn offer. Michael Dell holds onto his original, unchanging offer: $24.4 billion to investors to take the company private.

July 15: Major Dell stockholders T. Rowe Price (TROW) reiterates they will not support Michael Dell’s offer. T Rowe Price owns about 4.1 percent of Dell.

July 16: Dell hints they will postpone the vote on the buyout offer. Rumor is Dell’s special committee is either waiting to confirm the Michael Dell offer or even seek a better one, either from Dell or Icahn.

Reports are that BlackRock (BLK) who owns 4.4 percent of Dell, were going to vote against the buyout. Icahn reiterates that his deal would far exceed Dell’s, and would value the company at $15.50 to $18 a share.

Analysts warn that if neither buyout offer goes through, the results could be disastrous for Dell.  Jason Noland at W. Baird & Co. claimed that “(Dell’s) stock could go to $8-something or even lower. The PC market is bad and Dell is heavily exposed,” and without a turnaround engineered via buyout, the future for Dell is bleak.

Dell’s stock is down 1.15 percent to $12.99 a share. It’s up 28.30 percent on the year.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
ABGOY Abengoa S.A. ADR 0.16 -0.03 -15.79 2,000
BLK BlackRock Inc. 365.65 -8.22 -2.20 549,728
BX The Blackstone Group L.P. Representing Limited Par 25.83 -0.22 -0.84 3,470,024
TROW T. Rowe Price Group Inc. 65.92 -0.90 -1.35 1,500,736

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