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Dell agrees to $24.4bn buyout

Microsoft offers a $2bn loan
Tue Feb 05 2013, 14:42
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TIN BOX FLOGGER Dell has agreed a buyout with Michael Dell and Silver Lake Partners, valuing the firm at $24.4bn.

Dell's highly publicised leveraged buyout plans have been swirling in the news for almost a month with the firm reportedly courting interest from Microsoft along with private equity group Silver Lake Partners. Now Dell has announced that terms have been agreed, with the firm being sold for $13.65 per share, valuing it at $24.4bn.

Michael Dell, co-founder and CEO of Dell approached the firm's board back in August 2012 to take the firm private, and it had been widely tipped that Michael Dell would put part of his own money into buying the company. The firm said that the deal would see Michael Dell and Silver Lake Partners become owners of the company with Microsoft offering a $2bn loan.

Michael Dell said, "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. I am committed to this journey and I have put a substantial amount of my own capital at risk together with Silver Lake, a world-class investor with an outstanding reputation. We are committed to delivering an unmatched customer experience and excited to pursue the path ahead."

Dell's decision to go private means it can make drastic changes to its business without facing shareholder revolts. The firm is trying to reinvent itself as an enterprise equipment vendor and services company, and move away from the low margin tin box game for which it is known.

Aside from Microsoft ponying up $2bn, it isn't clear what the Windows outfit will be getting in the deal. Microsoft has a habit of helping out firms, it even loaned Apple cash when the company was on the ropes back in the late 1990s, but in this case it is likely Microsoft will want to have some say in how Dell wraps its hardware around the Windows operating system.

After the transaction Michael Dell, who owned 14 percent of the public company, will remain as CEO and chairman and will still retain significant equity in the firm, though the company did not disclose the amount. Dell said it expects the transaction to close before the end of Dell's second quarter in its 2014 fiscal year.µ

 

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