Dell unveiled plans Tuesday to take the former number one computer maker private in a buyout led by company founder Michael Dell worth $24.4 billion. "I believe this transaction will open an exciting new chapter for Dell, our customers and team members," Michael Dell said in unveiling the deal with investment firm Silver Lake, and backed by a $2 billion loan from Microsoft.
The company said it had signed "a definitive merger agreement" that gives shareholders $13.65 per share in cash - a premium of 25 percent over Dell's closing share price on January 11, before reports of the deal circulated. The move, which would delist the company from stock markets, could ease some of the pressure on Dell, which is cash-rich but has seen profits slump.
The Texas-based computer maker, which Dell started in his college dormitory room, once topped a market capitalisation of $100 billion as the world's biggest PC producer. The plan is subject to several conditions, including a vote of unaffiliated stockholders. It calls for a "go shop" period to allow shareholders to determine if there is a better offer.
"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," Michael Dell said of the plan. The company founder said Dell has made progress in its turnaround strategy "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," he added. Under terms of the deal, Michael Dell, who currently owns some 14 percent of Dell's common shares, would remain chairman and chief executive and boost his stake with "a substantial additional cash investment," a company statement said.
Cash for the deal will come from Silver Lake, a major tech investment group, and MSD Capital, a fund created to manage Michael Dell's investments. The plan also calls for a $2 billion loan from Microsoft, rollover of existing debt, and financing that has been committed by Bank of America-Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets.
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