Dell will be taken private for $24.4 billion, or $13.65 a share, in a transaction that will allow the company to try to turn itself around without the pressure of shareholder expectations.
Founder and CEO Michael Dell, who owns about 14 percent of Dell’s common shares, teamed up with Silver Lake Partners to acquire the company. Microsoft is also kicking in a $2 billion loan.
The deal, which is subject to regulatory and shareholder approval, should be wrapped up before the close of Dell’s fiscal second quarter, which ends in July. Following completion of the transaction, Michael Dell will continue to lead the company as CEO. He also will maintain a significant equity investment in the company by contributing his shares of Dell to the new company, as well as by making a “substantial,” additional cash investment.
Here’s what Michael Dell had to say today, via press release:
I believe this transaction will open an exciting new chapter for Dell, our customers and team members. 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 recognize 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 excited to pursue the path ahead.
Shares in Dell have soared since details first emerged about a possible deal. The offer price represents a 25 percent premium over the company’s closing price of $10.88 on January 11, the last day before Bloomberg first reported a potential deal. Shares recently grew a fraction to $13.36, trading below the offer price, which indicates shareholders likely aren’t expecting a higher bid.
Dell, which has long been one of the world’s largest PC makers, has been struggling of late. Before the deal, the company’s stock had lost about a third of its value over the past year as it shifted focus away from its traditional computer market to providing business products in areas such as networking and storage. It has made many acquisitions over the past several years and has said it will continue to do so. However, there are worries about how fast those businesses are taking off.
Dell has said it remains committed to the PC market. But Dell and rival Hewlett-Packard have had trouble competing with up-and-coming Asian rivals like Lenovo and Asus. Lenovo in late 2011 surpassed Dell to become the world’s second-largest provider of PCs.
As Michael Dell noted, going private is designed to give the company the time to turn itself around.