Dell Inc. struck a $24.4 billion deal to take itself private that it called a turning point in efforts to boost its value, even as some shareholders said they are unhappy with the deal’s premium.
Founder and CEO Michael Dell—along with Silver Lake Partners—will offer Dell’s holders a per-share price of $13.65 in cash.
The deal “immediately delivers value to shareholders,” Brian Gladden, Dell’s chief financial officer, said in a brief interview.
Dell said the deal requires approval by a majority of shares outstanding, excluding those owned by management and directors. It expects the deal to close by the end of its second quarter.
According to Wall Street Journal, Less than two hours after the deal was announced, rival Hewlett-Packard Co. quick to criticize the takeover, saying the buyout would add uncertainty for customers and limit Dell’s ability to invest in new products.
Dell will continue to be based in Round Rock, Texas.
Mr. Dell, who owns about 14% of Dell’s shares, will continue to lead the company as chairman and chief executive.
Microsoft is providing $2 Billion loan for privatizing Dell. Read below the statement from Microsoft.
REDMOND, Wash. – Feb. 5, 2013 – “Microsoft has provided a $2 billion loan to the group that has proposed to take Dell private. Microsoft is committed to the long term success of the entire PC ecosystem and invests heavily in a variety of ways to build that ecosystem for the future.
“We’re in an industry that is constantly evolving. As always, we will continue to look for opportunities to support partners who are committed to innovating and driving business for their devices and services built on the Microsoft platform.”
By going private, they’re giving themselves the opportunity to execute their turnaround strategy, which involves fewer PCs and more emphasis on business services, without having to make Wall Street happy on a quarter-by-quarter basis. It sounds sensible to me.
“And that is a good thing,” Roy Illsley, principal analyst from Ovum said to Computer weekly.
“The general view is that going private under Michael Dell’s own control will help Dell escape the mess HP has got into.”
MarketWatch writes as,
Since the PC is dead, what does that make Dell? The way I see it, the company has no choice but take the drastic step of going private, and then it can be redesigned or re-engineered or sold off for parts.
Read below the Key Timeline of Dell.
1984 – At the age of a 19 Michael Dell starts selling Computers with the business name “PC’s Limited”.
1988 – PC’s Limited changes its names to Dell Computer Corp and goes public, raising $30 million.
1992 – Dell debuts on Fortune 500, making Michael Dell the youngest CEO on the list at the time, at age 27.
2001 – Dell becomes No. 1 computer systems provider worldwide.
2004 – Michael Dell resigns as CEO but retains position as chairman to focus on his philanthropic foundation. Then-President and COO Kevin Rollins ascends.
2007 – Growth of Dell beings to slow. Rollins resigns and Michael Dell returns as CEO.
2012 – Dell acquired lot of companies.
2013 – Dell agrees to be taken private for $24.4 billion, or $13.65 per share, in a deal that involves private equity firm Silver Lakes, Microsoft Corp, and its Chairman Michael Dell.
Michael Dell is the inspiration for many Entrepreneurs and his Motivational Quotes inspire them lot.
Read below the full press release from Dell.
Dell Enters Into Agreement to Be Acquired By Michael Dell and Silver Lake
Date : 2/5/2013
Round Rock, Texas
- Dell stockholders to receive $13.65 per share in cash
- Transaction valued at approximately $24.4 billion
- Transaction implies a 37 percent premium over the average closing share price during the previous 90 calendar days ending Jan. 11, 2013
Dell Inc. today announced it has signed a definitive merger agreement under which Michael Dell, Dell’s Founder, Chairman and Chief Executive Officer, in partnership with global technology investment firm Silver Lake, will acquire Dell.
Under the terms of the agreement, Dell stockholders will receive $13.65 in cash for each share of Dell common stock they hold, in a transaction valued at approximately $24.4 billion. The price represents a premium of 25 percent over Dell’s closing share price of $10.88 on Jan. 11, 2013, the last trading day before rumors of a possible going-private transaction were first published; a premium of approximately 35 percent over Dell’s enterprise value as of Jan. 11, 2013; and a premium of approximately 37 percent over the average closing share price during the previous 90 calendar days ending Jan. 11, 2013. The buyers will acquire for cash all of the outstanding shares of Dell not held by Mr. Dell and certain other members of management.
The Dell Board of Directors acting on the recommendation of a special committee of independent directors unanimously approved a merger agreement under which Michael Dell and Silver Lake Partners will acquire Dell and take the company private subject to a number of conditions, including a vote of the unaffiliated stockholders. Mr. Dell recused himself from all Board discussions and from the Board vote regarding the transaction.
A Special Committee was formed after Mr. Dell first approached Dell’s Board of Directors in August 2012 with an interest in taking the company private. Led by Lead Director Alex Mandl, the Special Committee retained independent financial and legal advisors J.P. Morgan and Debevoise & Plimpton LLP to advise the Special Committee with respect to its consideration of strategic alternatives, the acquisition proposal and the subsequent negotiation of the merger agreement.
The Special Committee also engaged a leading management consulting firm to conduct an independent analysis, including a review of strategic alternatives for Dell and opportunities for the company as a public entity, and thereafter engaged Evercore Partners.
The merger agreement provides for a so-called “go-shop” period, during which the Special Committee – with the assistance of Evercore Partners – will actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals. The initial go-shop period is 45 days. Following that period, the Special Committee will be permitted to continue discussions and enter into or recommend a transaction with any person or group that submitted a qualifying proposal during the 45-day period. A successful competing bidder who makes a qualifying proposal during the initial go-shop period would bear a $180 million (less than 1 percent) termination fee. For a competing bidder who did not qualify during the initial go-shop period, the termination fee would be $450 million.
Mr. Mandl, lead director of Dell’s Board of Directors, said: “The Special Committee and its advisors conducted a disciplined and independent process intended to ensure the best outcome for shareholders. Importantly, the go-shop process provides a real opportunity to determine if there are alternatives superior to the present offer from Mr. Dell and Silver Lake.”
Mr. Dell said: “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.”
“Michael Dell is a true visionary and one of the preeminent leaders of the global technology industry,” said Egon Durban, a Silver Lake Managing Partner. “Silver Lake is looking forward to partnering with him, the talented management team at Dell and the investor group to innovate, invest in long-term growth initiatives and accelerate the company’s transformation strategy to become an integrated and diversified global IT solutions provider.”
Following completion of the transaction, Mr. Dell, who owns approximately 14 percent of Dell’s common shares, will continue to lead the company as Chairman and Chief Executive Officer and will maintain a significant equity investment in Dell by contributing his shares of Dell to the new company, as well as making a substantial additional cash investment. Dell will continue to be headquartered in Round Rock, Texas.
The transaction will be financed through a combination of cash and equity contributed by Mr. Dell, cash funded by investment funds affiliated with Silver Lake, a cash investment by an investment fund affiliated with MSDC Management, L.P., a $2 billion loan from Microsoft, rollover of existing debt, as well as debt financing that has been committed by BofA Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets (in alphabetical order), and cash on hand. There is no financing condition.
The transaction is subject to other customary conditions, including receipt of required regulatory approvals, in addition to the Dell stockholder approvals described above. The transaction is expected to close before the end of the second quarter of Dell’s FY2014.
For further information regarding all terms and conditions contained in the definitive merger agreement, please see Dell’s Current Report on Form 8-K, which will be filed in connection with this transaction.
J.P. Morgan and Evercore Partners are acting as financial advisors and Debevoise & Plimpton LLP is acting as legal advisor to the Special Committee of Dell’s Board of Directors. Goldman, Sachs & Co. is acting as financial advisor and Hogan Lovells US LLP is acting as legal advisor to Dell. Wachtell, Lipton, Rosen & Katz is acting as legal advisor to Mr. Dell. BofA Merrill Lynch, Barclays, Credit Suisse, and RBC Capital Markets (in alphabetical order) are acting as financial advisors to Silver Lake, and Simpson Thacher & Bartlett LLP is acting as legal advisor to Silver Lake.
About Dell
Dell Inc. (NASDAQ: DELL) listens to customers and delivers worldwide innovative technology, business solutions and services they trust and value. For more information, visit www.Dell.com. You may follow the Dell Investor Relations Twitter account at: http://twitter.com/Dellshares. To communicate directly with Dell, go to www.Dell.com/Dellshares.About Silver Lake
Silver Lake is the global leader in private investments in technology and technology-enabled industries. Silver Lake invests with the strategic and operational insights of an experienced industry participant. The firm has over 100 investment professionals and value creation specialists located in New York, Menlo Park, San Francisco, London, Hong Kong, Shanghai and Tokyo and manages approximately $14 billion. The Silver Lake portfolio includes or has included technology industry leaders such as Alibaba, Allyes, Ameritrade, Avago, Avaya, Business Objects, Flextronics, Gartner, Gerson Lehrman Group, Groupon, Instinet, Intelsat, Interactive Data Corporation, IPC Systems, MCI, Mercury Payment Systems, MultiPlan, the NASDAQ OMX Group, NetScout, NXP, Sabre, Seagate Technology, Serena Software, Skype, Spreadtrum, SunGard Data Systems, UGS, Vantage Data Centers and Zynga. For more information about Silver Lake and its entire portfolio, please visit www.silverlake.com.