Posted April 1, 2013 by David H in Technology

Dell Inc (NASDAQ:DELL) staying public comes with challenges and risks - BX & ORCL

Northern, WI 04/01/2013 (avauncer) - Dell Inc (NASDAQ:DELL) (Current: $14.33, Down by 0.07%) seems to be very clear with the path it wants to take. At the moment there are three buyout offers that have gone public. The company has laid out a preliminary report for its shareholders about the buyout proposal that Michael Dell the founder of the company and Silverlake Partners, has put forward. Their offer stands at $24.4 billion.

The other contenders

The other offer that is currently on the table is from Icahn who has proposed a buy out price of $15 per share for a 58 percent stake in the company. The Blackstone Group L.P (NYSE:BX) (Current: $19.78, Down by 1.35%) who is the third bidder at the moment has put forth an offer of more than $14.25 per share. These two deals will mean that the company will be burdened with debt and keeping it public as well. At this juncture, Dell Inc (NASDAQ:DELL) feels that both of the offers are steeped in risk and that Michael Dell’s offer seems the safest and one that can keep them afloat as well.

The repercussions

The company’s profit outlook has been on the vane and the company will have to make a decision soon about the fate of the company. Though there has been no direct indication at the Icahn and Blackstone offers the company has sent out warning signals though in a discreet manner. A leveraged capitalization will mean that stockholders will be benefited to a certain degree but it is laced with too many challenges and risks. The company is in strategizing mode and any move such as this one will hamper its long-term business plans that it wishes to pursue in an aggressive manner. It might also lead to loss of customer, employee and supplier confidence as far as its potential is concerned.

Thorough review carried out

The Bolton Group was approached by Dell to carry out an objective business analysis of the company and the statistics show that the revenues are slated to slide right until 2016 and any buy-out plan must be able to bring about some winds of change. Michael Dell also had a meeting with The Blackstone Group L.P (NYSE:BX) and Francisco Partners which was its buyout partner. This meeting had taken place in the “go-shop” period and Blackstone had shown signs of keeping Michael Dell as the CEO in case their buyout plan materialized. The final out-come of that meeting and another one that was held last week is not yet clear.

Clashing aims

Michael Dells main concern is that if Blackstone does end up acquiring the company their plans may clash with the ones that Dell has and that they might consider breaking it up as well. Blackstone is going full-steam ahead with its plans and had also tried in vain to pull in mark Hurd the Oracle Corporation (NASDAQ:ORCL) (Current: $32.33, Up by 1.19%) president to take over the Dell reins in case they were successful in the buyout. Michael Dell has also not left any stone unturned and for the past five months very methodically set out a game plan which he hopes will come through as well.

David H

David H. Steinberg grew up in West Hartford, Connecticut, entered Yale at age 16, and earned his law degree from Duke University, where he served as editor-in-chief of the law review. After four years of entertainment law in Atlanta and New York, he abandoned his legal career to attend U.S.C.’s Peter Stark Producing Program. Steinberg broke out as a writer in 1999 with his teen comedy SLACKERS that ignited a bidding war for the script. The movie starred Devon Sawa, Jason Schwartzman, and model Jaime King and became an instant cult classic.