It is unfortunate, when at times circumstances dictate heart rending solutions for the betterment of a situation. This scenario seems to have manifested itself in the DELL power struggle that has been making headlines quite recently. Michael Dell, founder and CEO of the company is under scrutiny by his share holders as his competency and ability to help the company develop and grow while continuing to procure profits for its shareholders are being questioned.
The proposed solution for this problem, a buyout/acquisition proposal by Blackstone Group, one of the shareholders of DELL has quickly escalated into one of the biggest equity-led private buyouts. Michael DELL owns shares amounting to 15.6% of DELL. However, this hasn’t stopped Blackstone Group making an offer of purchasing shares at a rate of $14.25 per share. Similarly, DELL’s power struggle caught the eye of billionaire investor Carl Ichan, who charms shareholders with the offer of $15 per share.
With these plans offering better and much more promising results to shareholders, Michael Dell is under pressure to fight for his right to remain on as CEO. In the aforementioned proposals, only Ichan has made any allusion to requiring Mr. Dell’s services in the company once the buyout is complete while Blackstone Group stays silent in this regard. However, rumors do confirm that Blackstone Group are already head hunting for a CEO to replace Michael Dell in anticipation of their take over. The stakes are high in this buy out since Michael DELL stands to not only lose his position but also his dorm-room company which he nurtured to be counted as the World’s No.3 PC maker.
Understandably, Michael Dell is feeling the squeeze and pressure put on by the shareholders and these two proposals. If Blackstone’s proposal gets accepted, Mr. Dell may lose his company and his position. His original plans for DELL however remain a little obscure in the limelight in light of this personal buyout battle. Michael Dell had proposed in December to take the company private which would have let the company expand and spend more through acquisition while focusing less on obtaining profits for public shareholders. Michael Dell’s proposal seems to have been met with little enthusiasm since it entails expenses that might weigh down the profits while the share prices might also get hurt which would make the privatization of the company a more feasible and reasonable step to take.
The two proposals for the buyout and the one proposal for taking the company private have been submitted for scrutiny to DELL’s board. Based on their decision, one of the three proposals will be selected. However, if the board members choose to go for an alternate proposal, Mr. Dell gets a chance to revaluate and submit a new proposal to the board members to improve his original offer and beat the competition. Nonetheless, if Mr. Dell is unable to beat his competitors’ offers, then the future seems grim for DELL’s CEO to safeguard his position. Moreover, Michael Dell has promised to support Blackstone Group’s proposal on the basis that they guarantee his spot as CEO upon acquisition of the company. However, the power struggle in this buyout is far from over.
[Image via japantimes]