# Michael Dell Using Own Money to Take Control of Company

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#### freggo

##### Distinguished
"15.7 percent stake, which is worth a meaty \$3.6 billion USD,"

So a Billion will get him another approx 5% for a total of about 20%
How does that 'control' the company ?

Just curious how the math works.

#### azraa

##### Honorable
20% IS a huge share, my friend.
Most shareholders have less than that, summing up to 100%
Usually the boards are made of the top % owners.

#### dns7950

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[citation][nom]freggo[/nom]"15.7 percent stake, which is worth a meaty \$3.6 billion USD,"So a Billion will get him another approx 5% for a total of about 20%How does that 'control' the company ?Just curious how the math works.[/citation]
[Citation][nom]Quote[/nom]"Bloomberg reports that between his current stake and up to \$1 billion in personal funds, Michael Dell would be putting up more than half of the total \$8 billion to \$9 billion equity check for going private. The remainder of the takeover would be financed by debt and maybe even some of the \$11 billion in cash the company said it had back in September 2012. Silver Lake and Microsoft are expected to invest between \$1 billion and \$2 billion each."[/citation]

#### kinggremlin

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[citation][nom]azraa[/nom]20% IS a huge share, my friend.Most shareholders have less than that, summing up to 100%Usually the boards are made of the top % owners.[/citation]

No, the OP is right, once again THG fails at math.

Article says that his \$1 billion investment will push his stake past 50%. If he currently controls 15.7%, which is worth \$3.6 billion, then adding \$1 billion doesn't push his stake to over 50%. \$4.6 billions is not over 50% of 23-24 billion.

G

#### Guest

##### Guest
Here is a simple example:

Dell is bought for \$20B fund by Michael Dell (\$4B), MS (\$2B), SL (\$2B) and debt (\$12B)

Michael Dell will then own 50% and MS and SL will each own 25%. The \$12B in debt can be paid off by the cash Dell currently has.

#### Shin-san

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Wow. Microsoft could buy them out by themselves. Wouldn't be a good idea though

#### tokencode

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[citation][nom]fuggly[/nom]Here is a simple exampleell is bought for \$20B fund by Michael Dell (\$4B), MS (\$2B), SL (\$2B) and debt (\$12B)Michael Dell will then own 50% and MS and SL will each own 25%. The \$12B in debt can be paid off by the cash Dell currently has.[/citation]

Exactly, those criticizing the math are forgetting the cash on hand at the company. If you own 15% of the company, you also own 15% of the \$11b cash that they have.

#### soundping

##### Distinguished
Hardware DRM = less sells.

#### jdwii

##### Splendid
If the guy wasn't so greedy he would have all his share or enough to own the company

#### anti-painkilla

##### Distinguished
[citation][nom]tokencode[/nom]Exactly, those criticizing the math are forgetting the cash on hand at the company. If you own 15% of the company, you also own 15% of the \$11b cash that they have.[/citation]

No you don't. It belongs to the company and not you.

He is using his shares, personal money PLUS other investors.

Dry

#### stickmansam

##### Splendid
[citation][nom]anti-painkilla[/nom]No you don't. It belongs to the company and not you.He is using his shares, personal money PLUS other investors.[/citation]

All he has to do is get the company to buy back stock, thus increasing his market share, or get the company to pay dividends to share holders to get cash that way

#### Benthon

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Really excited to see what reinventing happens here!

#### tokencode

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[citation][nom]stickmansam[/nom]All he has to do is get the company to buy back stock, thus increasing his market share, or get the company to pay dividends to share holders to get cash that way[/citation]

Exactly, if you were to buy the company outright for \$20b, included with the company is \$11b in cash. The difference is \$9b, of which \$3.6b is owned by Michael. If he buys another \$1b with his own money, he now owns \$4.6b of the \$9b in share value, over 50%. I believe that is where the number comes from.

#### kinggremlin

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[citation][nom]tokencode[/nom]Exactly, those criticizing the math are forgetting the cash on hand at the company. If you own 15% of the company, you also own 15% of the \$11b cash that they have.[/citation]

The reason the math doesn't make sense is because the purchase would require about \$15 billion of the 20+ billion price to be financed which is glossed over by the article. This would result in as much as \$900 million in annual interest payments alone. Who is going to want to finance that? Dell has cash but, they wouldn't spend it all on the purchase. That would make zero sense. Also, a large chunk of it is overseas to avoid paying taxes on it. It would have to be brought to the US at about a 30% tax before it could be used.

#### zulutech

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[citation][nom]kinggremlin[/nom]No, the OP is right, once again THG fails at math.Article says that his \$1 billion investment will push his stake past 50%. If he currently controls 15.7%, which is worth \$3.6 billion, then adding \$1 billion doesn't push his stake to over 50%. \$4.6 billions is not over 50% of 23-24 billion.[/citation]
No no, that's not how it works. To be the majority decision maker he needs the largest percent that anyone has. No one else individually holds more than 20% of Dell.

#### ruel24

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Controlling interest is enough to have the power to wield at will. A man named Smale had just 1% of GM stock in the early 1990's and pushed his weight around to have the CEO fired. Bill Gates had like 30% of Microsoft stock.

Majority interest is when you have more than 50% of stock.

Sometimes a minority holder has majority interest, such as the Ford Family. They have special stock that, collectively, gives them 51% of the voting shares.

#### Gundam288

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[citation][nom]ruel24[/nom]Controlling interest is enough to have the power to wield at will. A man named Smale had just 1% of GM stock in the early 1990's and pushed his weight around to have the CEO fired. Bill Gates had like 30% of Microsoft stock.[/citation]
Any chance Bill Gates will pull a "Smale" and have Steve Ballmer fired?

#### bit_user

##### Splendid
He should just let it go and do something else with the rest of his life and money.

Love him or hate him, Bill Gates has probably saved millions of lives by now, in his quest to fight infectious diseases.

So what, if Dell goes under. Someone else would just take their place. But I'm sure Michael Dell really could make a real impact in a whole range of other areas.

#### iamtheking123

##### Distinguished
[citation][nom]zulutech[/nom]No no, that's not how it works. To be the majority decision maker he needs the largest percent that anyone has. No one else individually holds more than 20% of Dell.[/citation]
Being the largest shareholder doesn't mean you have control. To have control means you have at least 51% ownership, where you can ignore the other 49%.

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