Investing.com - Financial Markets Worldwide
🎁 💸 Warren Buffett's Top Picks Are Up +49.1%. Copy Them to Your Watchlist – For FreeCopy Portfolio

The Dell Shareholder Revolt

ByCharles Sizemore
Published 02/13/2013, 12:55 AM
Updated 07/09/2023, 06:31 AM
DELL
-

Charles Sizemore gave his thoughts to Erika Morphy of the E-Commerce Times on the shareholder revolt that is threatening to de-rail the leveraged buyout of Dell (DELL) by a group led by founder Michael Dell:

These investors have valid points as they make their case against the LBO, said Charles Sizemore, manager of the Dividend Growth and Tactical ETF models at Covestor.

“Applying a P/E ratio of just 12 would get you a stock price of nearly $18. Applying a price/sales ratio of just 1 would get you to $33 per share,” he told the E-Commerce Times. “Even though Dell’s offer to pay what amounted to a 25 percent premium over the pre-announcement market price, there is a case to be made that it is far too low.”

Indeed, if Michael Dell raises his price, Dell would presumably have to take on more debt to make the deal happen, Covestor’s Sizemore said. “Having too high a debt load is risky for a company in a fast-changing sector like tech.”

What Dell can do to bring these shareholders on board with the plan is unclear.

Dell could change the terms and raise the price above the $13.65 that’s on the table, suggested Barry Randall, who runs the Crabtree Technology Model for Covestor.

It could include a one-time dividend payment to current, pre-private investors, he added.

Dell could also remind investors that the share price had been languishing and that the market had largely given up on the stock, Sizemore said.

Dell is worth more than what was offered, but the bottom line is that a company is only “worth” what someone is willing to pay for it, Sizemore maintained.

Latest comments

Loading next article…
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.