Dell Private Equity Buyout: March 22 Go Shop Deadline

Dell's special committee is seeking alternative bids for the PC company through March 22. Will a new buyer or bidder emerge? Or will Michael Dell and Silverlake Partners come out ahead?

The VAR Guy

March 15, 2013

4 Min Read
Dell Private Equity Buyout: March 22 Go Shop Deadline

When Dell (NASDAQ: DELL) announced plans to go private, the proposed $24.4 billion private equity buyout included a March 22 “Go Shop” deadline. As part of that deadline, a Dell Special Committee has actively solicited alternative bids, and potentially entered negotiations with alternative buyers. But have any other bidders line up to buy Dell? And will any offers beat the $24.4 billion plan currently on the table? Oh, and how should channel partners react in the meantime? Hmmm…

As you likely know, a growing list of shareholders object to the proposed private equity deal. Activist investor Carl Icahn earlier this week reached a confidentiality agreement, which allows him to at Dell’s books. The Wall Street Journal suggests Icahn was once considering a $15 a share bid for Dell, but apparently an actual bid has yet to materialize.

Some pundits have wondered if Hewlett-Packard or Lenovo would open their wallets for Dell. But the smart money — and The VAR Guy’s own viewpoint — suggests neither PC maker wants to try to swallow Dell.

But back to The VAR Guy’s original questions…

1. Have Any Other Bidders Lined Up to Buy Dell?

Sit tight, folks. Dell will likely provide the answer on March 22 or shortly thereafter, when the Go Shop period expires.

2. Will any new bids exceed the $24.4 billion offer currently on the table?

Investors are betting that there could be at least one bid that nudges Dell’s sale price up ever-so-slightly. But don’t expect any huge bidding wars for Dell. If a bidding war was expected, Dell’s stock would be trading at a lofty premium vs. the current private equity offer. No such stock premium has emerged.

3. What’s the impact on channel partners?

The Wall Street Journal earlier this week suggested Dell partners and customers are “on edge” over the proposed private equity deal. The Journal also suggested that Dell has not communicated with partners about the pending company sale process.

The VAR Guy begs to differ. The Wall Street Journal’s story angle here was just plain wrong. Dell Channel Chief Greg Davis has openly stated that the company remains committed to partners amid this process. And Davis only days ago reiterated that statement to The VAR Guy. Davis and his lieutenants are working hard to keep partners informed but let’s remember: Dell can’t say much about the actual sale process because the Go Shop discussions are confidential.

Either way, consider the bottom line: The current deal proposal suggests Michael Dell will remain CEO and Channel Chief Greg Davis will retain his post. Both Dell and Davis have been consistent in their channel messaging for several years now. You might even say Dell has been more consistent than HP in the channel over the past three years.

That’s why The VAR Guy is betting Dell will remain channel friendly in the weeks and months to come. But our resident blogger concedes: He’ll be listening closely for more Dell updates on or about March 22 — when that Go Shop period comes to a close.

And even then, the process won’t end. Dell still needs to win shareholder approval. And plenty of shareholders have reservations about the current deal.

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