A special committee formed by
) recently announced that a "go shop" period has been awarded due
to the merger agreement between Dell and entities owned by
Michael Dell. Two proposals were submitted to the special
committee, one by fund manager
) and the other by entities of activist investor Carl Icahn. The
shares of Dell responded positively and have moved up.
The Special committee comprises four independent directors.
After detailed discussions with independent financial and legal
advisors, the committee concluded that both proposals had the
credibility to result in deals in accordance with the terms of
the existing merger agreement.
Michael Dell's $24.4 billion takeover bid is now in jeopardy
because of the higher prices being offered by the prominent
investors. Billionaire Carl Icahn is ready to form an alliance
with Blackstone Group LP in order to take control of this leading
computer maker away from its founder.
Icahn has reached a conclusion after completing its discussion
with Blackstone, after the bids have come from the other parties
in the deal, to put some amount on the table from Michael Dell
and private equity firm Silver Lake Partners LP. This new joint
bid offers much more return to the shareholders. The new bids are
far better for shareholders compared to the offer made
The inclusion of the third party has been approved and
materialized by the special committee. The success of the
company's go-shop process has yielded two alternative proposals,
which have the potential to create additional value for Dell's
Although privatization might have helped Dell move away from
public scrutiny, the go-shop period has raised new problems for
founder Michael Dell. It now appears that privatization could
take some time because of the interest generated by outside
This apart, the ever-increasing competition from companies
such as Lenovo, Asustek,
) has restricted Dell's growth prospects. These players are
growing at a faster rate than Dell, even in the emerging markets.
We are also concerned about the conservative tech spending,
continued weakness in the PC market in 2013, declining revenues
and competition from its peers.
Currently, Dell has a Zacks Rank #3 (Hold).
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