Southeast asset, which owns 8.4% of Dell's shares, has publicly opposed Dell's privatization on Tuesday, foreign media reported. The reason is that the $24.4 billion leveraged buyout offer jointly launched by founder Michael & middot; Dell and Silver Lake capital is flawed, and Dell has failed to fully prove that shareholders should accept the $13.65 per share offer.
In addition to opposing Michael's offer, Southeast also voted against the privatization offer of another private equity giant, Blackstone Group, and radical investor Carl & middot; Icahn.
Every troublemaker has his own plan
In fact, this is not Dell's first case of blatant "firing.". For a long-term bet on Dell's southeast assets, accepting the privatization plan is tantamount to accepting the huge Waterloo with a share price ranging from $40 to $13.65. Therefore, people in the industry have said that it is not surprising that southeast asset's "backwater".
Recently, Dell also received two alternative acquisition proposals from Blackstone Group and Carl & middot; Icahn.
At present, Carl Icahn, an American millionaire, holds about 80 million shares in Dell, including a $5 billion equity commitment. Icahn proposed to acquire Dell's shares of other shareholders at US $15 per share, totaling US $2 billion, and provide another US $2 billion in cash equity financing; existing shareholders will be able to convert their shares into new Dell's shares at a ratio of 1:1, or cash at US $15 per share, and all shareholders except Icahn will get up to US $15.65 billion. If all eligible shareholders choose Icahn's offer, Icahn and its partners will hold about 24.1% of new Dell's shares.
Investors led by Blackstone Group are willing to buy Dell at $14.25 per share, and existing shareholders will have the opportunity to stay on the board. Previously, it was also reported that Blackstone wanted to "change the Dynasty" of the new Dell and planned to recruit Mark & middot; Hurd, President of Oracle [Weibo], as the new CEO of Dell.
According to foreign media, Blackstone Group is negotiating with a number of technology companies to jointly bid for Dell's financial services business. The business mainly includes providing customers with loans to purchase Dell products and extending the lease of Dell product business. The acquisition method is equity financing, debt financing or a combination of the two.
The future of Dell, which is caught in the competition among the founder, Blackstone Group and Carl & middot; Icahn, is uncertain, and the attitude of southeast assets brings more uncertainty to Dell's future. Other analysts said that many Wall Street investment banks coveted the consulting and financial work involved in Dell's privatization deal because it could bring them a total of $400 million in revenue. According to the rules of financing transactions on Wall Street, only the banks that provide loans to the ultimate buyers can obtain profitable financial expenses. Currently, the banks leading the deal include bank of America, Barclays Bank, Credit Suisse and Royal Bank of Canada, each of which is expected to receive about $67 million in revenue. In addition to the lead bank, Deutsche Bank, UBS group and Morgan Stanley are also involved in the deal. In addition, JPMorgan Chase, evercore partners and Goldman Sachs, which provide services to Dell, will also receive about $60 million in consulting fees, foreign media said.
Double edged sword of privatization
In fact, the interests of most investors and shareholders are closely related to Dell's own business situation and prospects, which seems to be more worrying.
More than a decade ago, Dell pioneered online computer customization and purchase, and worked closely with Asian parts suppliers to ensure the lowest production cost. This was considered an innovative model at that time. However, in the mobile internet terminal market, Dell has missed the opportunity. At the end of last year, Dell also announced that it would abandon its smartphone business around the world. On the tablet, Dell has not released a tablet so far.
At the same time, the rapid decline of the PC field is a heavy blow to Dell. In the fourth quarter of last year, Dell's net profit was US $530 million, a year-on-year decrease of 31%; its revenue was US $14.314 billion, a year-on-year decrease of 11%. In the last fiscal year, Dell's net profit was $2.372 billion, down 32% from the previous year, and its revenue was $56.94 billion, down 8% from the previous year. According to Gartner, Dell PC shipments fell 21% in the fourth quarter of 2012. At present, Dell's PC market share has fallen to the fourth place, behind HP [Weibo], Lenovo and Acer [Weibo].
At the beginning of this year, IDC released the "global market share ranking of smart connected devices". In this list covering the sales of PC, mobile phone and tablet computers, Samsung [Weibo] and apple ranked first and second, Lenovo ranked third, and Dell did not even rank in the top five.
In this competitive environment, Dell has to transform again. Dell China has repeatedly stressed to the first financial daily that in 2013, Dell will continue to strengthen the capabilities of end-to-end solution providers globally and in China.
However, Dell, which started with PC, will not easily give up its old business. At the beginning of this year, Dell China's relevant senior executives told reporters that Dell's transformation will still depend on the channel foundation obtained by the PC business. To this end, Dell will not only reduce the size of PC, but also expand its market share by increasing the proportion of low-end products.
However, at this stage, the high profit market of enterprise services is mainly occupied by IBM [microblog], HP, Oracle and other manufacturers. These manufacturers can not only provide more comprehensive software and hardware solutions, but also have strong customized R & D capabilities. At present, Dell does not have such strength.
The problem now is that investors may not agree that privatization can help Dell out. An analyst told reporters that privatization will put Dell in heavy debt and slow down its large-scale acquisition. As Shaw Wu, an analyst at Sterne Agee, an investment bank, wrote in an investor report: 'stocks that are not publicly traded make it more difficult for Dell to launch a large-scale acquisition because it has to use most of its cash to repay its debt interest. '
Another possibility is that under the pressure of capital, Dell will sell its cash flow business and retain its high profit business, or split up its high profit business and package it as an enterprise IT company similar to IBM, EMC, etc., and then seek to go public again.
Privatization may buy the declining giant some time, but it is unlikely to reverse all its troubles. Moreover, judging from the current situation, whether Dell's privatization can succeed is still a question mark.