Texas Business Report: Dell Finally Goes Private
A Done Dell
After months of delays and deliberations, Dell Inc. shareholders voted Thursday to take the company private in a $24.8 billion buyout from CEO Michael Dell and the Silver Lake Partners investment group. The deal, which is expected to go through by November 1, comes after a lengthy back-and-forth between Dell and a group of investors led by Carl Icahn, who contended the company was being undervalued, Businessweek reports. Icahn dropped his opposition earlier this week.
Proponents of the move say it will give Round Rock–based Dell “the flexibility it needs to make investments … without the limitations and scrutiny that come with being a public company.”
The Bottom Line: Dell is hoping this strategy will create an opportunity to turn around a slowdown in computer sales. Profits dropped off 72 percent last quarter, and its stock price has fallen by more than 40 percent since 2007, according to Businessweek.
Flight or Fight?
A federal judge signed off on American Airlines’ bankruptcy proposal Thursday, concluding a negotiation process that began when the Fort Worth–based carrier filed for Chapter 11 protection almost two years ago. It’s not quite a done deal just yet—the New York Times reports the approval is “contingent on Justice Department approval of the carrier’s merger with US Airways,” an arrangement that federal regulators challenged in August over antitrust concerns. The airlines plan to fight the DOJ’s lawsuit in court in November.
Rounding out this week’s trifecta of long-awaited Texas business deals, a group of Californian and Canadian investors have agreed to acquire Dallas-based retailer Neiman Marcus Group for $6 billion, the Dallas Morning News reports. The buyers, Canada Pension Plan Investment Board and Ares Management LLC, “will hold an equal interest in the retailer, and Neiman Marcus management … will retain a minority stake.” The sale is set to be finalized in the next fiscal quarter.
Neiman’s new owners say customers won’t notice any changes, but they are planning to expand the company as a whole, in keeping with an “approach of accelerating growth in companies in the consumer and retail sectors,” one of Ares’ senior partners said in a statement announcing the deal.
The Bottom Line: Outgoing owners TPG and Warburg Pincus bought Neiman’s in a leveraged buyout 2005 for $5.1 billion, before the recession took its toll on luxury retailers. Prior to making this week’s deal, the firms had also considered filing for an initial public offering, according to the Morning News.
Winner of the Week: McDonald’s
Good news for Austinites looking to save some time when ordering their Big Macs: McDonald’s has chosen the capital city as one of two test markets for its new mobile payment app. Businessweek reports the fast-food chain is seeking new ways to reach out to teens and millennials as its sales continue to slump. The new app, which will also be tested in Salt Lake City, will allow customers to order and pay in advance and then pick up their food at the counter, curb, or drive-thru window.
Not to be outdone, Burger King has gone one step farther, rolling out a home delivery service in some locations — including Houston, Sugar Land, and Missouri City — for orders over $10.
Loser of the Week: BP
Texas City residents who live near a former BP refinery went to court this week, claiming the plant exposed them to toxic gases for a five-week period in 2010. The four plaintiffs are seeking more than $10 billion in punitive damages, which they have promised to donate to charity if they win, Businessweek reports. This is the first group of about 48,000 claims that have been filed over the incident.
The lawsuit accuses BP of venting “at least 500,000 pounds of toxic chemicals, including benzene, from a faulty refinery unit to a flare the company knew was incapable of destroying the toxins.” The neighbors’ attorney says the company chose to release the cancerous gases rather than take on the $20 million in losses it would have incurred if it had closed the plant for repairs. BP claims there is no evidence the venting caused negative health effects.