Rumours relating to a Dell buyout have been making the rounds for quite some but the computer manufacturer did not verify any reports until Tuesday, February 5 when the global powerhouse finally made it known that it had struck a deal. According to the announcement from Dell it is going private through a $24.4 billion deal which involves Microsoft Corporation and Silver Lake, a private equity firm. As per a New York Times report, the decision was made after Dell’s board of directors casted their votes on Monday night, February 4. The interesting part about this transaction was that so far this is the biggest leveraged deal that has materialised since the recession hit the world economy. That should make founder and Chief Executive of Dell, Michael Dell, pleased with this buyout. Moreover, this transaction will help the struggling computer manufacturer to turn things around without worrying about scrutiny from Wall Street.
In addition to this, Microsoft also announced on the same day that it has given a loan of $2 billion to Silver Lake and Dell. In a very short and snappy statement the company said it was “committed to the long-term success of the entire PC ecosystem” and it is investing diversely to keep that ecosystem going. On the other hand, as a result of this deal, share holders of Dell will get a 25 percent premium that is equal to $13.65 amount for each share of the company which worth $10.88 on January 11, the last time this computer company’s shares traded before the trade rumours started to circulate.
With this fresh cash Dell will now look to do something drastic like Finnish mobile maker, Nokia or Waterloo-based Blackberry formerly known as Research In Motion. The company will probably focus on the mobile industry with tablets after it failed with smartphones and the overall weakening PC market has limited its main source of income.
Michael Dell declared in a statement released on Tuesday that, “I believe this transaction will open an exciting new chapter for Dell, our customers and team members. 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.”
Source: VentureBeat
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