Dell Goes Private for $24.4 Billion!

By Tony Rizzo February 05, 2013

Well, oftentimes significant rumors do prove to be true - when we first heard that Dell was exploring going private, we were skeptical but understood why Dell (that is Michael Dell, not the company Dell) might want to do so. Well, now the company has indeed pulled the trigger - and the underlying funding and deals to make it a reality.

It is an amazing thing to see a company once worth more than $100 billion in market cap (it's currently around $25 billion) go back to the private side - but it means no more quarterly reports, no more stockholders or huge institutional investors to answer to, to more need to drive ever growing revenue and profit - no need to ensure the company catches the tech waves exploding all around it - which Dell has now famously failed to do.

So what's the deal on the table? A consortium of buyers, with Michael Dell himself leading the way as the majority shareholder the private company that would emerge, will - in the largest leveraged buyout in five years (Blackstone Group‘s $26 billion takeover of Hilton Hotels in 2007) - offer all stockholders $13.65 a share in a deal that will be worth just about $24 billion. $13.65 represents a 25 percent premium over the share price of $10.88 back on January 11. The current price as we write is $13.29 but that is a tiny fraction of what Dell was once worth.

Technically the Dell board has indeed "closed a buyout" but shareholders will need to vote with their shares - will they take $13.65 a share or will they feel they are being shafted? Michael Dell himself is contributing his entire 16 percent stake in Dell towards the deal but he ends up essentially owning the entire company.

The deal - assuming it happens - will be supported by more than $15 billion of debt financing raised by at least four banks. It isn't clear yet what role Microsoft will play - it is extending a $2 billion loan to participate. We understand what would be at stake for Microsoft, but whether it pans out or not remains to be seen. Additional significant funds for the deal were provided by the investment firms Silver Lake and MSD Capital - which have been part of the rumors since they began.

There is plenty to consider in terms of what going private will mean for both Dell the company and for Michael Dell the man and founder. Stay tuned for analysis and additional details.




Edited by Stefania Viscusi

TechZone360 Senior Editor

SHARE THIS ARTICLE
Related Articles

The NFL and Twitter Just Put Fans in Charge of the Future of Sports Viewing

By: Special Guest    5/26/2016

Ask ten people you know what the last thing they viewed live was and eight of them will tell you, a sporting event. The others may cite the occasional…

Read More

10 Tech Tools to Get You Through 2016

By: Drew Hendricks    5/24/2016

A great example of how simple tech innovations can make even the smallest things in our lives a little easier, the Oombrella, developed by Wezzoo, is …

Read More

The Bigger Picture Behind Facebook's Bias Accusations

By: Special Guest    5/23/2016

Facebook recently followed up with a stern position that there was no biased manipulation of presented topics in its 'Trending Topics' section.

Read More

Tamiami Angel Fund II Adds 10th Company to Investment Roster

By: Steve Anderson    5/19/2016

The Tamiami Angel Fund II (T2) has been busy in recent months, adding a slate of new investment targets to its roster. T2 recently added one new opera…

Read More

Artificial Intelligence is no Longer Science Fiction, It's a Reality

By: Special Guest    5/18/2016

Talend Chief Evangelist says rather than being frightened by the perceived threat of AI, it would be wise to embrace the possibilities.

Read More