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Michael Dell Battles Dell Inc Buy Back
Yet another challenge for Dell CEO, Michael Dell this week!
However challenges are not new to Michael Dell who has had them throughout his career and overcome as many of them – starting with the launching of his company from his college dorm room (UT Austin). Along the way, he became one of the world’s most celebrated CEO and a towering icon of the PC industry.
Now, Michael Dell seeks to buyout stock and take the company back private again as he faces (arguably) the biggest challenge of his lifetime in securing the ~ 43% needed votes. Dell investors will vote this wed whether to accept his proposal for same. Michael Dell owns 16% of the company’s stock and needs ~43% shareholders vote to tide over the challenges from Carl Icahn and partners (who own 13% of the stock and ~ 20% of the shareholders votes, while being opposed to the buyout arrangement). Apropos a massive $24.4 billion hangs in the balance and so does the future of the company and the legacy of Michael Dell himself.
Dell’s proposal intends to pay investors $13.65 per share (bettering the opening $13.14 price offer). However critics contend the price to very low and that Michael Dell is trying to buy the company cheap so he can garner future profits to himself as the largest shareholder.
Michael Dell however argues on a longer term strategy and turn around – believes Dell can relive its past legacy and develop its PC and enterprise service businesses even better as a private company (sans quarterly earnings and investor activism pressures). And this will call for substantial investments in next-gen cloud data centre technologies, such as hyper scale servers and converged infra services. While Michael Dell seemingly has the support of the company board, critics argue his plan will saddle Dell corp with excessive debt and surmounting losses.
If Michael Dell’s buyout plan is defeated, investors will certainly lobby to replace him as ceo, and also work to remove many existing board members.
Michael Dell is truly sitting on a live wire for now…