How can you determine the purchase price and terms when a public
company acquires a private company and "terms are not disclosed." 
Specifically, how much did Dell Computer pay (cash and/or stock?) for
Plural recently?

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Request for Question Clarification by fugitive-ga on 10 Jun 2002 13:28 PDT

Are you more interested in the techniques used to determine
undisclosed purchase price of a public buying a private, or are you
interested in a specific case (such as your example of Dell Computer
acquiring Plural?).

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Clarification of Question by shinny-ga on 10 Jun 2002 14:41 PDT

I would specifically know the terms and conditions of the Dell/Plural
deal, especially price and whether they paid with cash or stock. 
Further, I would like to know how to find this information for similar
transactions.

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Clarification of Question by shinny-ga on 10 Jun 2002 14:42 PDT

Apologies for the typo.  I should have said "I would like to know....".

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Clarification of Question by shinny-ga on 11 Jun 2002 09:02 PDT

I understand how typical transactions are done, and understand
conventional valuation models.

What I am looking for, in the clearest way I can state it is, how does
one find out the terms of a deal when the "terms were not disclosed".

Also, I would like the specific price Dell paid for Plural.

Hello,


After a couple days of vacation, John Safran, the head of Dell
Investor Relations, returned my phone call which I left on Monday. I
inquired as to the aquisition of Plural by Dell saying I needed it for
investor information. I actually am quite interested in this company
and may infact invest money in the future so I wasn't exactly lying...
Anyways, here's what I found out. Through a phone call with John
Safran, he stated and I quote:

"We did buy plural. We are not disclosing the aquisition price because
it is non-material to ongoing operations and also because it's a
privately held company. It's pretty small last year they had only $46
million in sales and only about 200 employees. You really don't pay
much more if at all more than sales, so if you want to use that as a
guideline, then that's fine. But we're just not going to be specific
on it. If you have any other questions you can call our investor
relations line at 512-728-7800."

Dell's 2nd quarter earning will be released Thursday, August 15th on
http://www.dell.com/investor .

As per your clarification request, the easiest way to find out
information which is "not publically discussed" is to contact their
investor relations department as I have. Speak to the head of the
department, and tell him that you're interested in investing or
forming a business relationship with the company. Don't lie, or make
up tales of how you're the head of a multi-national conglomerate, but
be sincere in trying to find out your question. John Safran was very
polite and extremely humble on the phone, and gets paid a hefty salary
each year to dispense information and establish new relationships
between his company and others, so you'll always get a straight
answer. If they will not disclose specifics, as in this case, ask for
a ballpark figure so that you can better evaluate your options or
better form an opinion about their company. "Off the record" most
people will talk about anything.

So your short answer would be just around $46 million with the
aquisition of about 200 employees. If you have a more legitimate
reason for asking this question other than financial curiousity (I
don't know whether or not you are a business owner looking to persue
deals with Dell), please give that phone number a call and ask to
speak with Mr. Safran himself. As stated by Mr. Safran, they are not
legally held responsible for releasing aquisitions of this nature, but
he was nice enough to confirm a ballpark figure of close to $46
million, not two or three times the amount as may normally happen
(humbly suggested by seedy-ga). Judging from Mr. Safran's comment this
would put the aquisition price in the neighborhood of $40-$50 million.


Thank you for the opportunity to answer your question, if you require
more information, please clarify the question, or if you find this
answer satisfactory, please feel free to rate it. Thank you!

skermit-ga

Hello shinny,

Some of the comments on your earlier questions indicated the
difficulties of getting the information about undisclosed purchase
price of a company. I have nothing to add to that, but I found a
discussion topic at CMP that indicates there are other people
interested in hashing out what happened with the Dell acquisition of
Plural. You might be able to get further information there.

http://www.crn.com/Components/TalkBack/tb-read.asp?ArticleID=35589
TalkBack: Dell Acquires Plural  

http://www.crn.com/Components/TalkBack/tb-read.asp?VendorId=72
TalkBack: Let's Talk About Dell Computer Corp.  

Good luck,

czh

Hello Shinny:

  June 7, 2002
   http://www.infoworld.com/articles/hn/xml/02/06/07/020607hndellanalysis.xml

" Plural had revenue of $46 million in 2001. The company's 200
employees will join Dell and its five U.S. offices will stay open,
(Dell spokesman, Mike Maher)Maher said."

Since the purchase of Plural by Dell was a strategic purchase, the
purchase price would not have been based on a multiple of earnings
(EBITDA)(or future earnings) or cash flow, speculation would be that
it was based on what return the preferred stockholders and investors
were willing to accept.

The option holders reported that they were told their common stock
options were at a price of $.25 per share at the time of the
acquisition versus whatever "strike" price they had at issuance
(therefore the options were of no value) but the option holders could
compare the value of their original stike price times the number of
shares outstanding to find out what the owners valued the company at
that time versus what overall value the common owners had at the
acquisition time.  This does not take into acccount the value of the
preferred class of stock but something could be inferred if the option
agreements also detailed the preferred stock distribution.

From some of the discussion threads in the public forums, Plural went
through some significant rounds of layoffs/firings in the last 18
months so it obviously thought it had enormous upside potential at one
time. With no inside information and such an insignificant deal to
Dell, my estimate (not trying to start a rumor) would be two or three
times sales....$100 to 150 million.....  Not basis other than a guess.

What do you think??
  
Keep following the threads to see if any other rumors come out..

seedy

Shinny, there is no single mechanism for getting information of this
nature. Variables affecting one's approach include considering "public
vs. private", geography (certain states and countries have more
liberal financial transaction reporting requirements), and the type of
business engaged in by a company. The tools used to get an answer
include online services indexing the full-text of publications, public
filings (SEC, State filings, etc.).

In this specific case it is obvious that the terms of Dell's
acquisition of Plural, Inc. are being aggressively and intentionally
hidden (hence your question and our failure to come up with an
answer). This information will, no doubt, eventually surface, but I'm
assuming that timeliness is an important factor in your question.
Chances are that when this becomes public knowledge, you won't need to
ask us! Since there are no obvious public filings or sources (some of
us are still looking), the only mechanism I can think of is to call
someone at Dell or Plural and simply ask them what the purchase price
was, etc. Now, I know that you probably won't get an answer, but you
might. czh-ga has cleverly pointed you to some discussions sites with
what appear to me to include some disgruntled Plural employees to whom
you might direct some confidential email. There are legal
ramifications regarding disclosure by employees at the Dell and Plural
end, but so far as I know there is no issue with you at least pursuing
this question.

If I can come up with an answer for the specific question before your
deadline, I'll do so!

Good luck (again), : fugitive-ga