Privatization Deal worth $24.4 Billion for Dell
Michael Dell will be letting the technology company Dell Inc private in a deal worth $24.4 billion, which is the biggest leveraged buyout since the financial crisis. The founder and CEO of the company, and the private equity firm Silver Lake, are paying $13.56 per share in cash for the number three computer maker of the world.
The deal is being financed by equity and cash alike from Michael Dell, cash from Michael Dell’s MSD Capital Investment firm, cash from Silver Lake, and a loan of $2 billion from Microsoft Corp., and debt financing from Bank of America Merrill Lynch, Credit Suisse, Barclays and RBC Capital markets.
The parties expect that the deal will close before the end of the second quarter of fiscal 2014 of Dell. On January 14, news of the buyout talks appeared for the first time, although they reportedly started in the latter part of 2012. Previously, Michael Dell had acknowledged thinking about going private as far as back in 2010.
This price of $13.65 per share is actually a premium of round 24 per cent to the average $11 price of Dell stock before news of the deal talks appeared and is much below the $17.61 that the shares were trading for a year ago. Shaw Wu an analyst at Sterne Agee, said that he thinks the key question here is will the shareholders approve of this deal, because practically there is no premium where the stock is trading.
In delayed morning trading, the Dell shares opened 0.7 per cent higher at $13.65. The market share in PCs has been slowly ceded by Dell to the nimbler competitors like Lenovo Group and is struggling to re-ignite growth.