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

Avaya Files Chapter 11, Plans Restructuring

By: Steve Anderson    1/20/2017

Avaya turns to Chapter 11 bankruptcy in a bid to make some key changes and attempt to recover for the future.

Read More

Reports of the Death of the Deskphone are Premature; Allworx Says We're on the Verge of a Deskphone Revolution

By: Erik Linask    1/19/2017

We've heard commentary about the death of the deskphone for several years now. Yet, if you look on most corporate desktops, you'll still find one. The…

Read More

Microsoft Makes AI Moves in Montreal

By: Alicia Young    1/19/2017

Recently, Microsoft has shown a growing interest in Montreal's booming artificial intelligence (AI) presence. This has spurred a series of acquisition…

Read More

What to Do About Netflix Shares

By: Steve Anderson    1/19/2017

Netflix has destroyed all estimates about its share prices, but how should investors respond?

Read More

The End of Work as We Know It: 6 Big Predictions for 2017

By: Farrell Hough    1/19/2017

The future of work in 2017 and beyond will center on using increasingly capable technologies to improve our productivity to the point where we can foc…

Read More