Dell goes private with $25 billion buyout

Michael Dell’s long battle to take Dell private has come to fruition. Dell seems to have officially won his bid to take over the company bearing his name. Shareholders voted on Thursday to approve his $24.9 billion leveraged buyout of Dell with Silver Lake Management, ending an awkward seven-month fight over the future of the venerable PC maker.

Michael Dell.
Michael Dell.

As per the deal, shareholders will receive a total of $13.88 per share: $13.75 for each share of common stock held plus a special dividend worth 13 cents per share. Approval of the deal from founder Michael Dell and Silver Lake Partners is based on a “preliminary vote tally,” Dell said in a statement.

The battle began in February when Dell’s founder announced he wanted to take the company private to retool it away from the short-term expectations of the stock market. The deal will now take Dell private, ending a 25-year run as a publicly traded company.

“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,” said Michael Dell, who serves as the company’s chairman and CEO, in a statement.

In a conference call hosted after the announcement, Michael Dell said he will begin a “multiyear” endeavor to expand into new areas such as enterprise, cloud computing and security services. “We plan to go back to our roots, focusing on the entrepreneurial spirit that made Dell one of the fastest growing and most successful companies in history,” he said.

Over the last five years, Dell said in an interview, he has moved to shift Dell from primarily making personal computers, an ever more difficult business, toward providing software and services for corporate clients.

However, despite a slowdown in the PC market and a push toward new services, Dell’s Chief Financial Officer Brian Gladden says the company remains committed to PCs. “We’ll continue to make investments to play a leadership role in the PC business,” he says.

The buyout is expected to close by Nov. 1, and shares of Dell will continue to trade until the deal closes. Michael Dell would own 75% of the company once the merger is cleared, according to Gladden.

With a buyout deal complete, Dell can now shift toward revitalizing its business. “While they still have a really strong base on the PC side, they’ve been trying to move toward a more comprehensive IT solutions kind of company,” says Forrester analyst J.P. Gownder.

Dell and fellow PC companies have struggled in recent years as more consumers opt for more mobile devices such as smartphones and tablets. Global PC shipments have fallen for five straight months — the longest slump ever.

“The PC business is in a tough spot,” says IDC analyst Bob O’Donnell. “We don’t see any rapid turnaround anytime soon.”