Dell goes private

Feb 05, 2013

Dell secures $24.4bn in private finance from Michael Dell, Silver Lake and Microsoft

After weeks of rumours, Dell (NASDAQ:DELL) has confirmed this afternoon that it will go private in a $24.4bn deal involving Microsoft and private equity firm, Silver Lake.

The deal is being financed by cash and equity from company founder Michael Dell, cash from Silver Lake and Michael Dell’s investment firm MSD Capital, a $2bn loan from Microsoft and debt financing from four banks.

The transaction is expected to close before the end of the second quarter of Dell’s fiscal 2014.

The $13.65-per-share price is a premium of about 24 percent to the average of $11 price at which Dell stock traded before news of the deal talks broke and is far below the $17.61 that the shares were trading for a year ago, says Reuters.

Michael Dell has said the deal “will open an exciting new chapter for Dell, our customers and team members.”

In a statement he said: “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 recognise 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.”

Dell’s aim of moving away from its roots as a PC manufacturer is well-publicised. The feeling among some industry watchers is that the vendor will now be free to invest in its growing its enterprise business, where before it was constrained by its responsibilities to its shareholders.

One industry commentator described the move as “very exciting, as it makes Dell into the world’s biggest start up.”

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