Computer giant Dell is to go private under a US$24.4bn transaction led by founder Michael Dell and global tech investment firm Silver Lake and involving loans and financing from Microsoft and major investment banks.
Under the terms of the agreement, Dell stockholders will receive US$13.65 in cash for each share of Dell common stock they hold, in a transaction valued at about US$24.4bn.
The transaction is expected to close before the end of the second quarter of Dell’s current financial year.
The price represents a premium of 25pc over Dell’s closing share price of US$10.88 on 11 January, 2013, the last trading day before rumours of a possible going-private transaction were first published.
Once the transaction is complete, Michael Dell will hold 14pc of the company and will continue to lead it as CEO and chairman. He will also make a significant cash investment in the company.
The US$24bn transaction will be financed through a combination of cash and equity provided by Michael Dell, as well as cash from Silver Lake, cash invested by MSD Capital, a US$2bn loan from Microsoft, a rollover of existing debt and debt financing from Bank of America Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets.
A new future for Dell
“I believe this transaction will open an exciting new chapter for Dell, our customers and team members,” Michael Dell said.
“We can deliver immediate value to stockholders, while we continue the execution of our long-term strategy and focus on delivering best-in-class solutions to our customers as a private enterprise.
“Dell has made solid progress executing this strategy over the past four years, but we recognise that it will still take more time, investment and patience, and I believe our efforts will be better supported by partnering with Silver Lake in our shared vision.
“I am committed to this journey and I have put a substantial amount of my own capital at risk together with Silver Lake, a world-class investor with an outstanding reputation. We are committed to delivering an unmatched customer experience and are excited to pursue the path ahead,” Dell said.
Dell founded the company as a manufacturer of PCs while in a college dorm in Texas in 1984.
The company quickly grew into a multi-billion dollar PC giant after harnessing the power of the internet and call centres to sell computers.
It then expanded into a manufacturer of servers, as well as provider of IT services and software. Efforts at smartphones and TV products were not so successful.
The changing shape of the technology industry towards mobile and cloud and away from personal computers has forced the company to strive to take greater control of its destiny.
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