Expert views on Dell buyout: "challenges exist like before"

Tue Feb 5, 2013 8:53pm IST

A Dell laptop computer is seen in New York August 26, 2008. REUTERS/Brendan McDermid/Files

A Dell laptop computer is seen in New York August 26, 2008.

Credit: Reuters/Brendan McDermid/Files

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REUTERS - Computer maker Dell IncDELL.O said it agreed to sell itself to Michael Dell, its founder and chief executive, and private equity firm Silver Lake, in a $24.4 billion deal.

Below are comments on the deal from analysts and investors:

BRENT BRACELIN, ANALYST, PACIFIC CREST SECURITIES

"I think there are different avenues that Dell can pursue as a privately held company that will be much easier for them to pursue than as a public company. Clearly Dell is a big partner of Microsoft's. Microsoft has a vested interested in make sure Dell remains a partner."

THOMAS NYHEIM, VICE PRESIDENT AND PORTFOLIO MANAGER AT CHRISTIANA TRUST

"Dell is moving towards tablets, so it makes sense it would want to reinvent itself and go private for a post-PC world. This is a large deal, but it is probably unique-we won't see more of this size soon-in that the founder is such a large shareholder."

CARR LANPHIER, ANALYST, MORNINGSTAR

"It's a good deal for both sides. The company has been trading below enterprise value. I think for Michael Dell and Silver Lake this is a huge opportunity. They have spent $10 billion in acquisitions. With that kind of momentum behind them sit back and let things organically work themselves out over the next four years. For Microsoft they have a definitely concerted interest in making sure they have a conduit to their customers by partnering with Dell."

SHAW WU, ANALYST, STERNE AGEE

"I think the key question here is will shareholders approve this deal because there is practically no premium where the stock is trading. Frankly, it's smart for Michael Dell and Silver Lake to acquire for as low a price as possible. A high price would make the deal very difficult in terms of making it happen, in terms of raising debt and turning around the company."

CINDY SHAW, ANALYST, DISCERN GROUP

"It's not a surprise as it's been widely discussed for weeks. The terms of the deal have been widely speculated on. One of the key questions is going to be how much influence Microsoft is going to have over Dell's strategy."

SHEBLY SEYRAFI, ANALYST, FBN SECURITIES:

"This is an opportunity for Michael Dell to be a little more flexible managing the company. That doesn't take away from the fact they will have challenges in the PC market like they did before."

PHIL SILVERMAN, MANAGING PARTNER, KINGSVIEW CAPITAL, NEW YORK:

"I think it's (the amount) very reasonable, given that when rumors really started to hit, the stock was trading at around $10, so it's a 30 percent premium from back then. Given that it's Michael Dell taking the company, I wouldn't expect him to pay some big premium anyway especially given the size of the deal. This gives him flexibility. The market wasn't valuing the company at where he thinks it should be worth and who knows that better than him."

(Reporting By Jennifer Saba, Angela Moon, Nicola Leske and Ryan Vlastelica; Compiled by Dan Wilchins and Ben Berkowitz)

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