Andrew Bary has written an article for Barrons in which he discusses the Dell situation. He says “It looks as if Michael Dell is trying to steal his company from public shareholders. The big question is whether he will get away with it.”
Bary continues “The markets seem to be saying that Michael Dell will be able to pull off the $24.4 billion buyout deal approved by the board this morning. Dell shares now trade around 13.38, up 11 cents on the session, but below the buyout price of $13.65 in cash announced this morning. If Investors figured that Dell would have to increase the price to get shareholder approval, the stock might be trading above the deal price.”
Bary adds “Wall Street, however, may be underestimating the potential shareholder opposition to the Dell buyout. The price equates to just eight times projected profits of $1.65 per share in Dell’s fiscal year ending January 2014. The effective P/E is closer to six when Dell’s net cash of $5 billion, or $3 per share is factored in.
No major company has ever gone private at such a low price during the past decade … It’s maddening to some shareholders that Michael Dell’s leadership contributed to the sharp drop in the share price and now he is using that weakness to try and buy out public shareholders at what looks like a very low price.”
You can read more on this over here.
Kitguru says: Is the Dell owner pulling a fast one?