Dell investors may still gain after Blackstone pullout: Barron's

NEW YORK Sun Apr 28, 2013 12:59pm EDT

A Dell laptop computer is pictured in New York in this August 26, 2008 file photograph. REUTERS/Brendan McDermid/Files

A Dell laptop computer is pictured in New York in this August 26, 2008 file photograph.

Credit: Reuters/Brendan McDermid/Files

NEW YORK (Reuters) - Dell shareholders could still stand to profit even after Blackstone Group LP withdrew its bid to buy the world's No. 3 personal computer maker more than a week ago, Barron's said on Sunday.

On April 19, Blackstone's move knocked Dell shares to a two-month low and narrowed the fight for Dell between activist investor Carl Icahn and the company's founder Michael Dell and Silver Lake Partners, the newspaper said.

Blackstone dropped its bid for Dell at $14.25 a share, citing deteriorating demand for PCs.

On Friday, Dell's stock closed at $13.35, below the $13.65-a-share proposed buyout from its founder and Silver Lake.

"Dell shares now look appealing because investors stand to make a small profit if the Michael Dell-led offer gets approved," the paper said in its April 29 edition.

Icahn and Southeastern Asset Management, Dell's largest independent shareholder that complained the buyout offer being too low, have valued the company at more than $20 a share, Barron's said.

Icahn proposed in early March, about a month after the Dell/Silver Lake's announced its bid, for a $9-a-share special dividend. He has not made a formal offer for Dell, which Barron's said could involve a tender of 58 percent of the PC marker's stock at $15 per share.

If a Icahn offer does not emerge, Wall Street analysts reckon Dell might fall as low as $10 a share, the paper said.

The planned buyout, which has angered Southeastern and other major investors, faces a tough shot of being approved, excluding its founder who owns 16 percent of the company, according to the paper.

If Dell/Silver Lake bid fails, it will be "welcome news for Dell investors, who could then benefit from alternatives that offer immediate and long-term benefits that probably far exceed $13.65 a share," Barron's said.

(Reporting by Richard Leong; Editing by Maureen Bavdek)

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Comments (1)
foiegras wrote:
How do you define “Dell investors”? If you mean holders of common equity, then yes, they may gain a little if the deal goes through. If they hold the stock, they may lose everything in the future if Dell goes on the way it has been going – losing market share, obsolete product line, etc. – or if it’s LBO’d into bankruptcy, carved up, and sold as distressed pieces.

If you define investor as a bond holder, then you have already lost. Your previously A-rated paper now has an implied junk bond rating thanks to the impending leveraged buyout.

Apr 28, 2013 7:09pm EDT  --  Report as abuse
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