Michael Dell needs to work out some bugs with his buyout.
Yesterday, noted short seller Jim Chanos jumped into the fracas over Dell, saying that the $24.4 billion proposed takeover of the troubled PC giant has some serious glitches and that he’s betting against it.
Chanos, who runs hedge fund Kynikos Associates, told CNBC that he was shorting Dell shares because he believes the $13.65-a-share offer led by founder Michael Dell and private-equity firm Silver Lake Partners will fall apart.
“I’m puzzled here. Are people looking at the balance sheet and the cash flow statement of this company?” Chanos said, noting that Dell’s bread-and-butter PC business is struggling.
Chanos’ comments yesterday come as the company’s board of directors faces growing resistance from shareholders over plans to take the company private.
Investors including billionaire Carl Icahn, who snapped up a 6 percent stake in Dell, and Southeastern Asset Management, the biggest outside shareholder with 8.4 percent of the company, complain that the PE-led bid is too low.
Another beef: shareholders aren’t getting access to a $14 billion foreign cash stockpile that is being used to help fund the deal.
Icahn and Southeastern Asset Management maintain the company should return that cash to shareholders. Both are pushing for a special dividend, of either $9 or $12 a share.
“We see no reason that the future value of Dell should not accrue to all the existing Dell shareholders — not just Michael Dell,” Icahn said in a letter to Dell’s board yesterday.
Dell’s “go-shop” period — when other parties can come forward with competing offers — ends March 22. However, a rival offer is unlikely, sources say.
Shareholders are expected to vote on whether to accept the buyout in the next three to four months.