Michael Dell says he wants to save the company bearing his name, again. In perhaps his strongest defense of the now contentious offer to take the company private, the founder of Dell Inc. argued that the move would help the PC and enterprise computing manufacturer complete a critical transition it must make in the face of a “rapidly changing landscape.”
The fight over Dell’s future has intensified in recent months following competing offers for the company from a group of investors led by Dell and a different one headed by billionaire investor Carl Icahn. Both sides have been locked in a tug of war over the PC manufacturer that has split shareholders over the direction of the company’s future. Icahn in recent weeks has been acquiring additional Dell shares and now owns about 8 percent of the company’s outstanding stock, according to reports. (See: Icahn Raises Dell Stake, Urges Tender Offer).
Michael Dell isn’t going away quietly, though. In fact, in his recent presentation the chairman and CEO of the Round Rock, Texas-based company aggressively outlined why his vision for the company should prevail, highlighting many of the challenges facing the business and why the drawn out leveraged buyout proposed by Icahn could further jeopardize its operations. The leveraged buyout “would significantly increase the company’s business risks,” Dell said, adding it would “decrease the company’s financial flexibility and hurt [its] ability to weather an economic or business downturn.”
Making the case for the buyout he had proposed, Dell noted that the PC maker would be better able as a private company to avoid the destabilizing effects of “stock price volatility, including loss of customer confidence, erosion of employee commitment and management distraction from implementing the transformation.”
But what happens if Carl Icahn’s leveraged offer — which Dell said would increase the company’s debt leverage — is the version approved by shareholders? What will this mean for Dell’s future with the company he founded in his college dormitory? Will he still be a part of its future or will the new majority owners sack and replace Dell with a different CEO? Dell said he would continue to serve the company in whatever capacity the board of directors approved for him although it is highly unlikely that Icahn would change his mind about appointing a new CEO.
“I will remain committed to doing my utmost for the company,” Dell said in his presentation. “This is the same message I delivered to the Special Committee when they asked what would happen if they did not agree to a deal. I will also oppose the kind of imprudent leveraged recapitalization that has been suggested by certain other parties.”
This tough talk can cut both ways. It may push shareholders to approve the private buyout offered by Dell but in case they reject his offer, it will certainly leave the winner with no other option but to ask fire him.