Posted January 16, 2013 by Viraj Shah in Technology

PC Maker – Dell Inc. (NASDAQ:DELL) To Get Privatize - STX, GS, DELL, MHP, HPQ & IBM

Northern, WI 1/16/2013 (avauncer) - One of the largest PC makers in the world Dell Inc. (NASDAQ:DELL) are intending to get privatize as the shares of the company dipped considerably. It lost almost a third of its value last year and is in the process of buyout with the private- equity firms as per the sources of two persons who had a clue regarding this buyout.

The company is planning to privatize with TPG Capital and Silver Lake according to a source who requested not be disclosed as the dealings were private. The discussions could not work out as the private firms will not be in a position to fund the required financing or on how to go about with the investment exit in the near future.

Michael Dell, 47, Chief Executive Officer is striving hard to adopt acquisitions to sell products as the consumers are more attracted towards tablets and Smartphones also those with Apple Inc and Google Inc software.

An extensive number of banks have approached to finance one of the offers as told by a source. The quarter by quarter scrutiny by the public shareholders could be averted by the PC maker if the company goes private. As of Jan 111, the company’s market value was about $19 billion.

 Abhey Lamba, analyst at Mizuho Securities USA Inc. said that “The stocks of Dell Inc. (NASDAQ:DELL) have not done great and is being pressurized to accelerate good numbers”. “De-emphasizing two-thirds of the business are a hard strategy as the business would collapse”, he said.

Bloomberg reported that the stocks of Dell Inc. (NASDAQ:DELL) closed at $13 in New York. In 19 months, Dell’s bonds fell at the lowest level

In 1984, Michael Dell founded Dell Inc. (NASDAQ:DELL) in his university of Texas dorm room with $1000. He brought the industry to the top by bringing together all the personal computer parts and by selling them to the customers at a price lower than that of the rivals which included International Business Machines Corp. (NYSE:IBM). Dell began surging after Apple came into the picture and lost the top spot against Hewlett-Packard Company (NYSE:HPQ) in 2006.

Michael Dell ranks 65 on the Bloomberg Billionaires Index and has a net worth of $13.7 billion. He has an investment-management firm, MSD Capital LP which oversees about $9 billion. A part of this could be used to fund the offer.

$19.1 billion the company’s enterprise value is 4.4 times earnings before interest, taxes, depreciation and amortization for the last one year as researched by Bloomberg which is the lowest among all competitors in the hardware industry. But Hewlett-Packard Company (NYSE:HPQ) is the least with 3.5. Since 2007, its buyout may be the largest based on its market value as of Jan11. This could turn out to be the greatest buyout after HP took over Compaq in $19 billion in 2002.

Even Seagate Technology PLC (NASDAQ:STX), the disk- drive maker has planned on going private. In December, The Goldman Sachs Group, Inc. (NYSE:GS) upgraded the value of the stocks and said that the net value of Dell’s cash balance possess an opportunity for a more leveraged acquisition.  Bill Shope, an analyst from The Goldman Sachs Group, Inc. (NYSE:GS) said that “We would be customers of its stock as it has become core value play”. Michael Dell forecasted that in 2010 he would privatize the company.

The Financial Industry Regulatory Authority’s Trace, the bond-price reporting system said that Dell’s $400 million of 4.625 percent notes due April 2021 declined 6.64 cents to 102.2 cents on the dollar to produce 4.31 percent as of 4:27 p.m. in New York. Since June 2, 2011, it is the lowest level of debt. According to data provider CMA, owned The McGraw-Hill Companies, Inc. (NYSE:MHP), Five-year credit-default swaps on Dell’s debt spiked 104 basis points to 309 basis points as of 2:41 p.m. in New York

Shares of Seagate Technology PLC (NASDAQ:STX) were going up by 1.44% and increased to $34.46

Shares of The Goldman Sachs Group, Inc. (NYSE:GS) were down by 0.40% and closed at 135.59

Shares of Dell Inc. (NASDAQ:DELL) were up by 7.16% to close at $13.17

Shares of McGraw-Hill Companies, Inc.(NYSE:MHP) were down by 0.13% to close at $54.52

Shares of Hewlett-Packard Company (NYSE:HPQ) were down by 2.48% to close at $16.53

Shares of International Business Machines Corp. (NYSE:IBM) were down by 0.06% to close at $192.50

Viraj Shah

Viraj Shah has done M.Com (Finance) and currently pursuing CFP. He is a technical analyst who tracks US markets along with other global markets like India very closely. He is very passionate about stocks and believes that money can always be made in market.