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

Carly Fiorina For President: Why She May Be the Best Candidate for the Job

By: Rob Enderle    5/4/2015

Let's start out by saying I was anything but a huge fan of Carly Fiorina when she was CEO of HP, but everything is relative and I've come to look at m…

Read More

Social Media, Context and the New Face of Threat Intelligence

By: Tara Seals    5/4/2015

Conventional network defense tools such as intrusion detection systems and anti-virus focus on the vulnerability component of risk, with incident resp…

Read More

Multinational Corporations Demand More from Their Telecommunication Providers

By: Joe Rizzo    5/4/2015

Over the last several years, there have been many changes in the way corporations work and run their businesses. One department that has seen a lot of…

Read More

Cisco Board Names Chuck Robbins Next CEO; John Chambers to Become Executive Chairman

By: Peter Bernstein    5/4/2015

Three years ago Cisco CEO John Chambers said that his successor would be named within the next 2-4 years. Right on schedule, the Cisco Board of Direct…

Read More

Redefining Mobile Data Management

By: TMCnet Special Guest    5/4/2015

The consumerization of IT has brought together two very powerful forces: mobility and cloud. Either of these two represents a major shift on their own…

Read More