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Dell (DELL +5.4%) adds to its gains as Reuters reports LBO talks are now " in an advanced...

Dell (DELL +5.4%) adds to its gains as Reuters reports LBO talks are now " in an advanced stage," with 4 banks lined up to offer financing. P-E firm Silver Lake is said to be leading the deal, and working with one of its major investors in the process. Topeka's Brian White thinks a $15-$18/share price tag is possible, and Jefferies' Peter Misek views a $15-$17 price as achievable. But like others, Misek notes Dell presents unique challenges to P-E firms. (Bloomberg report) (earlier)
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Comments (5)
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    Bondholders are enduring some pain in the process, given the lack of change of control provision. With all the equity float to buy back in an LBO, the dilution to the debt will be massive. I don't see the deal working out. Dell is really between a rock and a hard place: with the albatross of the PC business in decline, and server share shrinking, where is the growth? Yes, SW and services, but is this enough to counter the declining growth elsewhere? Dell is a value trap.
    15 Jan 2013, 02:34 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8673) | Send Message
     
    As long as Dell is generating billions in free cash flow it can't be a "value trap".

     

    Kodak was a value trap.
    15 Jan 2013, 03:09 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    So if Dell is such compelling value, why hasn't a competitor waged an M&A or a bid for at least part of the business? The massive equity float is a barrier.
    15 Jan 2013, 03:41 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8673) | Send Message
     
    Dell's intrinsic worth is not dependent on an M&A shop offer to buy the company.
    18 Jan 2013, 12:45 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    Sobering: http://on.wsj.com/UOdQ3F. I think many would argue that Dell is no SJ, but that is what is needed to renovate the brand amid changing market demand.
    15 Jan 2013, 04:12 PM Reply Like
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