PC giant Dell to go private in $24.4 billion buy-out
6 Feb 2013 5:34 AM IST
Slumping personal computer maker Dell is bowing out of the stock market in a $24.4 billion buyout that represents the largest deal of its kind since the post-2008 global recession dried up financing for such risky manœuvre. The complex agreement announced on Tuesday will allow Dell's management to attempt a company turnaround away from the glare and financial pressures of Wall Street.
Dell stockholders will be paid $13.65 per share to leave the company on its own. That's better than the $11 level the stock was hovering at before word of the buyout talks trickled out last month but a steep markdown from the shares' price of $26 less than five years ago.
Once the sale to a group of investors which includes investment firm Silver Lake is finalised, Dell's stock will stop trading on the Nasdaq nearly 25 years after the Round Rock (Texas) company raised $30 million in an initial public offering (IPO) of stock. Microsoft Corporation is investing in the deal with a $2 billion loan. The company will solicit competing offers for 45 days.
The IPO and Dell's rapid growth through the 1990s turned its eponymous founder Michael Dell into one of the world's richest people. His fortune is currently estimated at about $16 billion. Michael Dell, who owns nearly 16 per cent stake in the company, will remain the CEO after the sale closes and will contribute his existing stake in Dell to the new company. Dell's sale is the highest priced leveraged buyout of a technology company, surpassing the $17.6 billion paid for Freescale Semiconductor in 2006. Leveraged buyouts refer to deals that saddle the acquired company with the debt taken on to finance the purchase.
The Dell deal is the largest leveraged buyout of any type since November 2007 when Alltel Corp sold for $25 billion to TPG Capital and a Goldman Sachs subsidiary. Within a few months, the US economy had collapsed into what would be its worst recession since World War II.
With more technology spending flowing to tablets and smart phones, PC sales fell 3.5 per cent last year, the first annual decline in a decade. More tablet computers are expected to be sold this year than laptops.
Dell stockholders will be paid $13.65 per share to leave the company on its own. That's better than the $11 level the stock was hovering at before word of the buyout talks trickled out last month but a steep markdown from the shares' price of $26 less than five years ago.
Once the sale to a group of investors which includes investment firm Silver Lake is finalised, Dell's stock will stop trading on the Nasdaq nearly 25 years after the Round Rock (Texas) company raised $30 million in an initial public offering (IPO) of stock. Microsoft Corporation is investing in the deal with a $2 billion loan. The company will solicit competing offers for 45 days.
The IPO and Dell's rapid growth through the 1990s turned its eponymous founder Michael Dell into one of the world's richest people. His fortune is currently estimated at about $16 billion. Michael Dell, who owns nearly 16 per cent stake in the company, will remain the CEO after the sale closes and will contribute his existing stake in Dell to the new company. Dell's sale is the highest priced leveraged buyout of a technology company, surpassing the $17.6 billion paid for Freescale Semiconductor in 2006. Leveraged buyouts refer to deals that saddle the acquired company with the debt taken on to finance the purchase.
The Dell deal is the largest leveraged buyout of any type since November 2007 when Alltel Corp sold for $25 billion to TPG Capital and a Goldman Sachs subsidiary. Within a few months, the US economy had collapsed into what would be its worst recession since World War II.
With more technology spending flowing to tablets and smart phones, PC sales fell 3.5 per cent last year, the first annual decline in a decade. More tablet computers are expected to be sold this year than laptops.
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