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One of them, Glass, Lewis & Co., said it sympathized with those who believe the buyout offer was too low, "especially considering that many of the unhappy shareholders are long-term investors in Dell who likely purchased the stock at higher average prices" than $13.65. Still, the firm said, the certainty of a cash payout was better than the risk in continuing to hold Dell shares, which it said would fall "significantly" if the buyout is rejected — maybe by nearly half.
Dell's stock fell 14 cents, or 1.1 percent, to close Wednesday at $12.88, below the $13.65 offered in the buyout. That's an indication that investors aren't holding out for a higher bid. Some analysts fear the stock will sink below $9 again if the deal with Michael Dell falls apart.
Michael Dell, the company's largest shareholder, is throwing in all of his stock and $750 million of his $16 billion fortune to help finance the sale to a group led by the investment firm Silver Lake. Dell's stock-and-cash contributions to the deal are valued at about $4.5 billion.
Software maker Microsoft, which counts Dell among its biggest customers, is backing the deal by lending $2 billion to the buyers. The remaining money to pay for the acquisition is being borrowed through loans arranged by several banks, saddling Dell with more than $15 billion in debt that could raise doubts about its financial stability among its risk-averse corporate customers.
The sale is structured as a leveraged buyout, which requires the acquired company to repay the debt taken on to finance the deal. Dell's sale is the second-highest-priced leveraged buyout of a technology company, trailing the $27 billion paid for First Data Corp. in 2007.
The Dell story is now famous: A 19-year-old started a business in 1983 by selling computer disk drives from his dorm room at the University of Texas at Austin. Soon he was assembling computers and undercutting conventional retailers on price. He then raised $30 million by taking the company public in 1988. Dell went on to change the PC business with low costs, customized orders and direct sales — first over the phone and later the Internet. The CEO climbed the ranks of the richest Americans.
In 2004, when Dell stepped aside as CEO, sales topped $40 billion a year and were on their way to more than $60 billion. Dell returned as CEO in 2007, after the company had fallen behind Hewlett-Packard Co. as the world's largest PC maker and after it endured an accounting scandal that resulted in a $100 million corporate penalty and Dell himself paying $4 million. The company's stock is down by more than 40 percent from where it stood when Dell returned for his second stint as CEO.
Now 48, Dell is seeking to turn the company around away from the glare of Wall Street and the demand for short-term, next-quarter results that investors demand from public companies. He would build upon the company's recent efforts through acquisitions to get into more-profitable lines including business software, network security and consulting.
Cindy Shaw, a technology analyst in San Francisco, said shareholders should take the $13.65 and get out. She remains skeptical about the company's ability to reinvent itself.
"The proposed strategy isn't substantially different from plans that haven't worked since Michael came back as CEO six years ago," Shaw said. In her view, the company lacks speed and panache in pursuing openings created by new technology, but Dell wants to secure his reputation and "really believes he can turn this around."
Moorhead was more upbeat and said that getting away from Wall Street's obsession with short-term results would help.
"It could take five or six years to switch from a PC maker to an end-to-end enterprise IT player," he said. "I have a lot of confidence in Michael Dell's ability to lead this company's transformation."