“What would I do? I’d shut it down and give the money back to the shareholders” —Michael Dell, Oct. 6, 1997, giving his opinion on how he’d run Apple. Well, Dell is at least taking half of his own advice, as Dell’s board is said to have voted unanimously to take the computer maker private in a $24.4 billion deal involving a private equity firm and software giant Microsoft.
Dell Inc.’s board is said to have unanimously voted Monday night on the deal, which will see Silver Lake and Microsoft paying $13.65 per share for the Round Rock, Texas-based PC maker. That is a 25 percent premium over the company’s closing share price on Monday, a 35 percent premium over its enterprise value as of January 11, and a 37 percent premium over its average closing share price during the previous 90 calendar days ending January 11.
Dell CEO Michael Dell is reported to be contributing his own 15.7% stake in the company, valued at over $3.6 billion. He will also throw another $700 million from his personal fortune into the pot. Dell will be taking a majority stake in the company, and will remain Chairman and CEO of the company.
Additional financing of the deal will come from Dell’s cash on hand, cash from Silver Lake’s investment funds, cash invested by MSD Capital, a $2 billion loan from Microsoft, rollover of existing debt, and debt financing from Bank of America Merrill Lynch, Barclays, Credit Suisse, and RBC Capital Markets.
The deal still needs to be approved by unaffiliated stockholders.
Mr. Dell said the deal would signal “an exciting new chapter” for the PC maker, with the buyout delivering “immediate value to our shareholders, 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.” He also stated that the company had made progress over the last four years, but by going private, the firm would be allowed the “time, investment, and patience” necessary to see that progress through.
Since 2009, Dell’s share price has went from the penthouse to the outhouse. It hit a high of $18.16 in February 2012, soon to plunge afterwards, only showing life again as rumors of a buyout surfaced.
The PC maker has seen its business suffer as the consumer market has moved away from traditional desktop and laptop PCs that Dell specializes in, toward smartphones and tablets. Dell’s own moves into the mobile computing space have been met with a less than enthusiastic reception.