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Dell goes private as shareholders approve $24.9 billion deal

The deal approved by shareholders Thursday marks a grueling victory for founder Michael Dell

By Agam Shah, Chris Kanaracus
September 12, 2013 10:42 AM ET

IDG News Service - Shareholders have voted to approve a $24.9 billion buyout of the company by founder and CEO Michael Dell and investment firm Silver Lake Partners.

They will be paid $13.75 per share, an increase from the original offer, as well as an additional cash dividend of 13 cents per share, for a total of $13.88 per share, according to Thursday's announcement.

The transaction was approved by those holding a majority of Dell's outstanding shares, the company said. An exact tally wasn't immediately available.

For Michael Dell, the vote marks a victory in a long and grueling fight to take the company private.

"I am pleased with this outcome and am energized to continue building Dell into the industry's leading provider of scalable, end-to-end technology solutions," he said in a statement.

Dell on Feb. 5 announced that Michael Dell and investment firm Silver Lake had offered $24.4 billion, or $13.65 per share, to buy out the company. The offer, subject to shareholder approval, included a $2 billion loan from Microsoft, and debt financing from Bank of America, RBC Capital Markets, Merrill Lynch and Barclays.

Dell is betting that as a private company operating outside the scrutiny of Wall Street, it will be better able to execute its strategy to push into high-margin products and services.

The vote had already been delayed twice, which analysts said was because Michael Dell and Silver Lake failed to find enough shareholder backing for its buyout proposal.

Dell's shareholders have expressed mixed opinions on the deal. Advisory groups like Institutional Shareholder Services have advised shareholders to vote for the Dell buyout plan in light of the deteriorating PC market. But some of Dell's major shareholders, including Carl Icahn, Yacktman Asset Management and Southeastern Asset Management, believe the company is being undervalued and criticized the proposal.

Analysts warned that a prolonged buyout battle could erode customer confidence in the company.

After the initial buyout offer from Michael Dell and Silver Lake, Dell went through a "go-shop process" for 45 days in which other parties were invited to make counteroffers. On March 25, Dell announced that two groups -- one led by Blackstone Group and the other by Icahn -- made counterproposals to buyout Dell. Blackstone offered a deal in excess of $14.25 per share, while Icahn and affiliates offered $15.00 per share for a leveraged buyout.

Ultimately Blackstone withdrew its offer, stating the eroding PC market and Dell's financial profile as reasons. Icahn and Southeastern made multiple counteroffers from May through July in which shareholders would have the option to continue holding Dell shares and get back cash or stock. But a special committee appointed by Dell's board to review counteroffers backed the Dell/Silver Lake offer, and raised questions about how Icahn's deal would be financed.

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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