Yesterday, at the last minute, Dell delayed its shareholder meeting to agree the Michael Dell/SilverLake deal by six days. The obvious conclusion is that they thought they’d lose the vote so needed more time to garner support. That support could be ‘bought’ by an increased deal. But that begs the question of whether Michael Dell wants to put even more of his personal fortune into the pot and, perhaps more questionable, whether SilverLake does too.
The prospects for the PC sector have worsened considerably since the deal was announced. Must admit I questioned the wisdom of the deal from Day One anyway.
But the really intriguing question now is whether SilverLake is secretly praying for the deal to collapse. Ronald Barusch pondered this very point in an excellent WSJ article – Does Dell Deal Dying have a silver lining for SilverLake? Barusch points out that if the deal gets approved but then Mr Dell/SilverLake reneges on the deal, they are in for a $750m termination penalty. Conversely if the Icahn deal was successful, Mr Dell/SilverLake could share up to $450m in compensation. Even if shareholders defeat the deal and Dell carries on ‘as is’, c$40m will be paid to cover expenses.
But, of course, all that pales into insignificance compared to the losses which might be incurred by any successful bidder who then fails to stop the rot at Dell. The decline in their core PC business is terminal. Dell has to reinvent itself. Reinvention is even more difficult than starting again from scratch. There are precious few rebirth success stories in the management handbooks. If Michael Dell thinks he can do to Dell what Steve Jobs did for Apple on his 'second coming', I suggest he thinks again.