Dell (DELL) May Not Go Private in 'Steal of the Century' as More Investors Feel Shorted

February 11, 2013 12:16 PM EST
Dell (Nasdaq: DELL) is positive Monday amid a release from the PC giant touting the shareholder value in its $13.65 per shar 'go private' deal. However, not everyone is as convinced.

Southeastern Asset Management (SAM) made the case late last week that shareholders should be getting something more like $24 per share. Given SAM's large 8.5 percent stake and plans to avail "all options" to halt the transaction, absolutely nothing appears to be in the books yet.

Over the weekend, Barron's ran a piece saying that Dell's move to escape the public eye might fall apart. Excluding cash, Dell is going for just six-time projected 2013 earnings, the lowest valuation for any major company to go private.

Some speculate that Dell might go back down to $9 per share if the offer is overturned, though Barron's sees the stock most likely losing just a point. Dell could move even higher if a tender offer is put in place. Barron's previously suggested a $10 billion tender offer for shares at $15, putting about 40 percent of shares back into treasury.

Along with SAM, Pzena Investment Management has also opposed the deal, which requires the majority of shareholders to approved for a mid-2013 close. Barron's also suggests that an activist investor like Carl Icahn, Dan Loeb, or others could take a stake and join in the effort to halt the deal.

Founder and CEO Michael Dell had previously stated plans to grow Dell's revs to $74 billion with operating profit of $6 billion by FY15, from FY12 revs of $56 billion and profit of $4 billion. Dell's software-and-services units would drive gains, not the declining PC business.

Given the potential for Michael Dell and private equity firm Silver Lake to make multiples on the LBO deal, some speculate that there's no other reason other than greed for Dell to go private. It would be more challenging to shift from a PC business when focus is more intensified on debt repayment.

With firm after firm voicing distaste on the deal, headlines are sure to be in traders radars before this case is closed. Dell is up 0.2 percent Monday.

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