Dell goes private, as Michael Dell and Silver Lake finalize $24.4 billion acquisition

The long-rumored deal to take Dell private has finally come to fruition, with founder Michael Dell and Silver Lake completing a $24.4 billion acquisition.

The transaction price represents a massive retreat from the private markets for the popular PC OEM. Microsoft, meanwhile, also participated in the deal with a $2 billion loan. The computing giant said in a statement:

“Microsoft is committed to the long term success of the entire PC ecosystem and invests heavily in a variety of ways to build that ecosystem for the future.

“We’re in an industry that is constantly evolving. As always, we will continue to look for opportunities to support partners who are committed to innovating and driving business for their devices and services built on the Microsoft platform.”

The move represents a price of $13.65 per share, though Dell – just late last year – traded for less than $9 a share. In a press release issued today however, the company announced that that the final share price works out at a premium of 25 percent, when compared with its closing share price of $10.88 on January 11, the last trading day before rumors of a deal were first published.

It’s also worth noting here that Michael Dell first approached the company’s Board of Directors in August last year, expressing an interest in taking the company private. In the wake of this deal, he will continue to run the company both as chairman and CEO.

He currently owns 14 percent of Dell’s common shares, but will retain an equity investment in the firm by injecting these into the new private company. Dell himself also made a cash investment.

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Dell reinvented?

Dell, in need of the flexibility to remake itself, will have long latitude out of sight as a private firm. Microsoft’s presence in the deal is certainly notable too, even if it only loaned a fraction of the funds. Its $2 billion ‘investment’ will likely give it sway as one of its key PC manufacturing partners; and if it can help guide Dell to build machines that fit its new operating system, that code itself might sell at a higher rate.

TNW first reported the possibility of a deal in mid-Janurary, a day which saw Dell shares shoot up by 15%. When Microsoft’s participation in the deal became known, it was originally tipped to be in the $3 billion range.

Interestingly, the terms of today’s merger include a “go-shop” period, which will allow other companies or interested parties to enter negotiations with Dell and offer alternative proposals – this period will last for 45 days.

A Special Committee, led by the company’s lead director Alex Mandl, will be in charge of these “go-shop” talks and could enter a new deal with any person or group that submits a better proposal during this period.

“The Special Committee and its advisors conducted a disciplined and independent process intended to ensure the best outcome for shareholders. Importantly, the go-shop process provides a real opportunity to determine if there are alternatives superior to the present offer from Mr. Dell and Silver Lake,” explains Mandl.

“I believe this transaction will open an exciting new chapter for Dell, our customers and team members,” adds Michael Dell. “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.”

Dell will still be headquartered in Rock Round, Texas following the merger agreement.

Top Image Credit: Jerry Luo