Dell Shareholders Getting a Rough Deal: Poll
Dell earlier this week announced that CEO Michael Dell and private-equity specialist Silver Lake Partners are acquiring the company in a deal worth $24.4 billion.
Under the terms of the transaction, Dell shareholders will receive $13.65 a share in cash, a premium of 25% to the company's closing price Jan. 11, when rumors of the deal emerged.
Some 87% of the respondents to TheStreet's poll, however, described the premium as a "joke," with only the remaining 13% seeing the buyout as a good deal for shareholders.
Michael Dell, of course, describes the take-private transaction as a win-win, both for the No. 3 PC maker and its shareholders.
"I believe this transaction will open an exciting new chapter for Dell, our customers and team members," he wrote, in a statement released on Tuesday. "We can deliver immediate value to stockholders, while we continue the execution of our long-term strategy and focus on delivering best-in-class solutions to our customers as a private enterprise."
The deal requires shareholder approval.
Nonetheless, the 25% premium has already prompted some raised eyebrows on Wall Street.
"The big question is whether shareholders will approve as it is only a slight premium to the current share price," wrote Sterne Agee analyst Shaw Wu, in a note released on Tuesday. "On the other hand, some may be glad to be 'bailed out' and vote in favor as it hasn't been easy being a shareholder over the last few years."
Dell shares have tumbled more than 33% in the last five years, weighed down by a weakening PC market, and pressure from tablet devices such as Apple's(AAPL) iPad. By going private, the Round Rock, Texas.-based firm hopes to gain the flexibility needed to charge into more lucrative areas such as enterprise software and services.
On Wednesday, Citi Research analyst Jim Suva upgraded Dell to "neutral" from :sell," citing the likelihood of the deal going through. "With the exception of 1-2 large institutional shareholders, getting majority shareholder approval seems doable given the 25% share premium," he wrote.
Dell shares dipped 0.15% to $13.50 in premarket trading on Thursday.
--Written by James Rogers in New York.