“A Delaware judge’s recent ruling that Michael Dell and Silver Lake Partners shortchanged public shareholders in the $25 billion leveraged buyout of Dell in 2013 vindicates the many critics of that dubious transaction, including Barron’s,” Andrew Bary reports for Barron’s. “Travis Laster, a Delaware chancery court judge, ruled that the fair value for Dell, the PC, software, and services provider, was $17.62 a share, rather than the price of $13.75 paid to shareholders by Michael Dell and his buyout partner, Silver Lake. That means public shareholders were shortchanged by $6 billion. But Dell and Silver Lake will pony up only a fraction of that amount—some $25 million plus $17 million in interest—because fewer than 1% of Dell shareholders participated in the arduous appraisal process that led to the ruling.”
“Dell was taken private after a highly contentious nine-month battle during which numerous large shareholders, including billionaire activist Carl Icahn and Southeastern Asset Management, argued that Michael Dell had taken advantage of Wall Street’s pessimism about the PC market to significantly underpay for the company,” Bary reports. “Facing strong opposition and a likely defeat in a shareholder vote, Michael Dell got the Dell board to make a key change in the voting rules in return for a token increase in the deal price, allowing his lowball offer to prevail.”
“Dell’s financial performance since the deal appears to support our view that Michael Dell and Silver Lake stole the company,” Bary reports. “Dell’s success since the LBO probably means that Michael Dell and Silver Lake have earned a multiple of their equity investment. It also has enabled Dell to reach a $63 billion deal to buy the larger EMC (EMC), a transaction that appears on track to close this summer. Within a few years, Dell likely will be public again and it then should be apparent just how lucrative the LBO really was.”
Read more in the full article here.
MacDailyNews Take: Mikey, when you “shut it down and give the money back to the shareholders,” it’s implied that you give all of the the money back to the shareholders.
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