Dell goes private in a $24.4bn deal

It's a done deal - after days of negotiations and speculations Dell has sealed its private buyout deal. Michael Dell and Silver Lake have entered into a definitive agreement to buy Dell in a deal that is valued approximately at $24.4bn.

According to a release from Dell, "Under the terms of the agreement, Dell stockholders will receive $13.65 in cash for each share of Dell common stock they hold, in a transaction valued at approximately $24.4bn. The price represents a premium of 25% over Dell's closing share price of $10.88 on Jan. 11, 2013, the last trading day before rumors of a possible going-private transaction were first published; a premium of approximately 35% over Dell's enterprise value as of Jan. 11, 2013; and a premium of approximately 37% over the average closing share price during the previous 90 calendar days ending Jan. 11, 2013. The buyers will acquire for cash all of the outstanding shares of Dell not held by Michael Dell and certain other members of management."

Egon Durban, Managing Partner at Silver Lake said, "We are looking forward to partnering with him, the talented management team at Dell and the investor group to innovate, invest in long-term growth initiatives and accelerate the company's transformation strategy to become an integrated and diversified global IT solutions provider."

As expected, Michael Dell will control the company as ‘Chairman and Chief Executive' by virtue of him being one of the key investors of the buyout in terms of stock and cash. Michael Dell owns 14% of Dell's common shares and is also making substantial additional cash investment.
This is one of the complicated deals in the tech space in the recent times. Given Dell's scale and size it was impossible for any one single party to stage a buyout. And the way the deal was structured has given huge scope for multiple investors to take a slice of the company. According to Dell sources, "The transaction will be financed through a combination of cash and equity contributed by Michael Dell, cash funded by investment funds affiliated with Silver Lake, cash invested by MSD Capital, L.P., a $2 billion loan from Microsoft, rollover of existing debt, debt financing that has been committed by BofA Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets and cash on hand.

Reflecting on the deal, Michael Dell said, "I believe this transaction will open an exciting new chapter for Dell, our customers and team members. 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 recognize 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."