This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Dell and Best Buy: Tough Takeover Trades

A recent stabilization in Best Buy's holiday season sales helped the company's buyout prospects ahead of a February 2013 deadline on Schulze's 'proposal' to take the Minnesota-based company private.

Even if Schulze finally decides to ante up with a formal offer for Best Buy, investors playing the company's takeout aren't likely to see a gain. Best Buy shares trade over 40% below the high end of Schulze's buyout proposal.

By year end, Best Buy, Dell or pieces of Hewlett Packard could very well end up in the hands of a private equity owner. Guessing how, when or if such a deal would occur is much more likely a money losing proposition than a similar telecom trade from 2012.

For the ordinary investor, playing the eventual takeout of a company like Best Buy or Dell is a risky game given the limited resources of the private equity industry and a plethora for former blue chip tech stocks that are now rumored to be in buyout negotiations.

In the case of Dell, those assessing the takeout value of the third leading PC maker see limited upside from current share prices, which already appear to test the limits of what a private equity firm may be able to handle.

Earlier in January, Bernstein Research analyst Toni Sacconaghi gave the PC-maker a sum of the parts value of $12 a share - roughly in line with current share prices.

Sacconaghi, noted that both Dell and HP being valued at their breakup value by some investors given a bleak outlook for a PC market turnaround. HP's individual assets, the analyst calculated, are worth $29 a share, in an analysis that gives investors a better chance at a return.

-- Written by Antoine Gara in New York
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DELL $0.00 0.00%
BBY $28.12 4.42%
HPQ $9.42 4.43%
MSFT $50.50 1.63%
AAPL $93.99 0.31%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs