NST Online Top Stories - Google News
NST Online Top Stories - Google News |
| Dell to go private in landmark $24.4 billion deal - Reuters Posted: 05 Feb 2013 09:09 AM PST  Dell founder and CEO Michael Dell displays a Dell tablet computer during his keynote address at Oracle Open World in San Francisco, California in this September 22, 2010 file photograph. Credit: Reuters/Robert Galbraith/Files
(Reuters) - Michael Dell will take Dell Inc private for $24.4 billion in the biggest leveraged buyout since the financial crisis, a deal that allows the billionaire chief executive officer to revive the fortunes of his computer company without Wall Street scrutiny. The deal - announced on Tuesday and financed with cash and equity from Michael Dell, cash from private equity firm Silver Lake, and a $2 billion loan from Microsoft Corp - will end a rocky 24-year run on public markets for a company conceived in a college dorm room. To many investors, Dell's decline in market share since its peak in the early 2000s symbolizes the rapidly dwindling prospects of the personal computer industry. The world's No. 3 PC maker, which Michael Dell began in 1984 as a computer-sales outfit while he was still a 19-year-old pre-med student at the University of Texas, is now going through a painful transition from a pure PC maker to a one-stop provider of enterprise computing services. Sales of PCs still make up the majority of its revenue. Analysts say the restructuring may entail job cuts and more costly acquisitions, as the company arms itself to do battle with larger and more established rivals like Hewlett-Packard Co and IBM Corp. "We recognize this process will take more time," Chief Financial Officer Brian Gladden told Reuters. "We will have to make investments, and we will have to be patient to implement the strategy. "And under a new private company structure, we will have time and flexibility to really pursue and realize the end-to-end solutions strategy." Gladden said the company's strategy would "generally remain the same" after the deal closed, but "we won't have the scrutiny and limitations associated with operating as a public company." Michael Dell and private equity firm Silver Lake are paying $13.65 per share in cash for the world's No. 3 computer maker. Michael Dell's MSD Capital investment firm will also provide cash financing for the deal. Bank of America Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets will offer debt financing. Shares of Dell were up 0.8 percent at $13.38 in morning trading. Dell, whose fairy-tale rise throughout the 1990s and the early part of the next decade once made it a Wall Street darling, has ceded market share in recent years to nimbler rivals such as Lenovo Group. That is in spite of Michael Dell's efforts in the five years since he retook the helm of the company following a brief hiatus during which its fortunes waned. As of 2012's fourth quarter, Dell's share of the global PC market had slid to just above 10 percent from 12.5 percent a year earlier as its shipments dived 20 percent - the fastest quarterly pace of decline in years, according to research house IDC. While analysts said Dell could be more nimble as a private company, it will still have to deal with the same difficult market conditions. International Business Machines Corp last decade underwent what is considered one of the most successful transformations of a hardware company, all while trading on public markets. "This is an opportunity for Michael Dell to be a little more flexible managing the company," said FBN Securities analyst Shebly Seyrafi. "That doesn't take away from the fact they will have challenges in the PC market like they did before." RECORD BUYOUT The deal would be the biggest private equity-backed leverage buyout since Blackstone Group LP's takeout of the Hilton Hotels Group in July 2007 for more than $20 billion, and is the 11th-largest on record. The parties expect the transaction to close before the end of Dell's 2014 second quarter, which ends in July. News of the buyout talks first emerged on January 14, although they reportedly started in the latter part of 2012. Michael Dell had previously acknowledged thinking about going private as far back as 2010. The $13.65-per-share price is a premium of about 24 percent to the average $11 price of Dell stock before news of the deal talks broke and is far below the $17.61 that the shares were trading for a year ago. "The key question here is will shareholders approve this deal, because there is practically no premium where the stock is trading," Sterne Agee analyst Shaw Wu said. J.P. Morgan and Evercore Partners were financial advisers, and Debevoise & Plimpton LLP was the legal adviser to the special committee of Dell's board. Goldman Sachs was financial adviser, and Hogan Lovells was legal adviser to Dell. Wachtell, Lipton, Rosen & Katz was legal adviser to Michael Dell. BofA Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets were financial advisers to Silver Lake, and Simpson Thacher & Bartlett LLP was its legal adviser. (Writing by Ben Berkowitz and Edwin Chan; Editing by Gerald E. McCormick and Lisa Von Ahn) |
| Obama calls on Congress to pass spending cuts, tax changes to delay sequester - Washington Post Posted: 05 Feb 2013 08:38 AM PST President Obama on Tuesday will call on Congress to pass a small package of spending cuts and tax changes to delay deep reductions in domestic and defense spending from starting next month, a White House official said. The official did not name any specific spending cuts or tax changes — which ultimately could include the closing of loopholes or deductions benefiting the wealthy or select industries — but said they should postpone the automatic spending reductions, known as the sequester, for a few months. Obama will make a statement at 1:15 p.m at the White House. Any plan passed by Congress would have to reduce borrowing by tens of billions of dollars through a combination of alternative spending cuts or tax increases. It would be a stopgap measure with only weeks to go until the March 1 deadline for the onset of sequestration. While Republicans, who have been warming to the idea of allowing the sequester to go forward, may agree to alternative spending cuts, the tax changes would likely be a flashpoint. Obama has made clear he expects wealthy Americans and select industries, such as finance and oil and gas, to pay more taxes toward deficit reduction. Responding to the White House on Tuesday, House Speaker John Boehner (R-Ohio) reaffirmed House Republicans' opposition to tax increases. "President Obama first proposed the sequester and insisted it become law. Republicans ... believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes," Boehner said in a statement. "The president's sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years." The sequester was a mechanism that Congress and the White House designed in 2011 to force policymakers to generate significant deficit reduction over the next 10 years. While they have made progress on that front — accumulating over $2 trillion in deficit savings — they have not come to a broad agreement as many hoped. The sequester would slice $1.2 trillion in domestic and defense spending over 10 years, indiscriminately cutting most programs. (Some programs, such as Medicaid and food stamps, are exempt.) "While we need to deal with our deficits over the long term, we shouldn't have workers being laid off, kids kicked off Head Start, and food safety inspections cut while Congress completes the process," the White House official said. "With our economy poised to continue to strengthen this year, the president will make clear that we can't see another self-inflicted wound from Washington," the official added. "The president will urge Congress to come together and act to ensure these devastating cuts to defense and job-creating programs don't take effect." The "fiscal cliff" deal at the start of the year postponed the sequester for two months. Obama favors a broader plan to permanently end the sequester and replace it with a series of reductions in health care and other mandatory spending as well as the elimination of tax breaks that benefit the wealthy and industries. Republicans favor deep cuts to spending without raising taxes any more. |
| You are subscribed to email updates from Top Stories - Google News To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
0 ulasan:
Catat Ulasan