Today, Dell has announced that they have agreed to go private in a $24.4 billion deal lead by Michael Dell, founder of Dell, and the investment firm Silver Lake. This is the largest buyout since the financial crisis.
The buyers’ consortium, which also includes Microsoft, will pay $13.65 a share under the terms of of the deal. This is approximately 25 percent higher that what Dell’s stock traded for before the news broke about the sale.
Michael Dell will contribute around 14 percent toward the transaction. Dell will also contribute cash through his private investment firm, MSD Capital. Microsoft is going to loan an $2 billion, while Silver Lake is expected to contribute around $1 billion in cash.
Dell’s board met last night to vote on the deal; however, Mr Dell removed himself from any discussions on the deal and did not vote.
After years of decline, Dell will now attempt to revive the company through tighter control under Mr. Dell as a newly private company.This takeover is Michael Dell’s most drastic move to turn Dell around since he founded the company in 1984 out of a college dormitory.
With the new competition over the years, first from other computer manufacturer’s followed by smartphones and tablets, Dell sales has really taken some damage. Microsoft’s decision to loan the money for the buyout was to solidify them as one of Dell’s most important business partners as well as to lessen the concern of the companies future.
Mr. Dell is quoted as saying, “I believe this transaction will open an exciting new chapter for Dell, our customers and team member. 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.”
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