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

Related Articles

Jeff Bezos, Elon Musk Square Off on Rocket Firsts

By: Doug Mohney    11/25/2015

On Monday, November 23, Blue Origin successfully flew the first fully reusable rocket into space, giving the company first bragging rights. Founder Je…

Read More

Autonomous Car Technology Takes New Leap Forward With Ford, Uber

By: Larry Alton    11/24/2015

The age of the self-driving car is nearly upon us, or at least that's what major technology and automotive companies are hoping. There have been major…

Read More

Unusual but Fun Tech Ideas for 2015

By: Rob Enderle    11/24/2015

Well, it's the week of the big sales, and many of us are planning to buy that special someone a special something. I figured I'd join my peers and poi…

Read More

Locus Telecommunications is Challenging the FCC's Authority, Claiming Due Process Violations

By: Special Guest    11/24/2015

One of a handful of prepaid calling card companies slapped with a $5 million fine by the Federal Communications Commission (FCC or Commission) for its…

Read More

Kaspersky: Three Out of Four Users Have Trouble Spotting Big Threats

By: Steve Anderson    11/23/2015

We all know that spending on cybersecurity has been on the rise lately, as everyone from major corporations to military groups ramp up their cyberdefe…

Read More