“Dell Inc. on Tuesday said it reached a deal to take itself private, in a buyout that marks an unofficial end to the era when a handful of young entrepreneurs made PCs the dominant computing device,” Anupreeta Das and Ben Worthen report for The Wall Street Journal.
“Under the terms of the agreement, Dell stockholders will receive $13.65 in cash for each share of Dell common stock they hold, in a transaction valued at approximately $24.4 billion,” Das and Worthen report. “The price represents a premium of 25% over Dell’s closing share price of $10.88 on Jan. 11, 2013, the last trading day before rumors of a possible going-private transaction were first published.”
Das and Worthen report, “The transaction will be financed through a combination of cash and equity contributed by Mr. Dell, cash funded by investment funds affiliated with Silver Lake, cash invested by MSD Capital, L.P., a $2 billion loan from Microsoft, rollover of existing debt, as well as debt financing that has been committed by BofA Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets, and cash on hand.”
Read more in the full article here.
Dell “sits in third place in a PC market in decline, having failed to capture the recent booms in smartphones or tablets,” Tim Bradshaw reports for The Financial Times. “After Mr Dell stepped back as chief executive in 2004 and handed the reins to Kevin Rollins, the PC maker was hit by setback after setback: laptops with faulty batteries, missed Wall Street forecasts, falling margins and an SEC investigation into accounting fraud related to its partnership with Intel, which eventually led to a $100m settlement.”
“By the time Mr Dell returned to lead the company in February 2007, Apple had just unveiled its iPhone,” Bradshaw reports. “Although Mr Dell proudly pronounced that ‘“it feels like 1984 and I am starting over again,’ the post-PC age had already dawned.”
Read more in the full article here.
MacDailyNews Take: Once Dell shareholders approve the deal, Michael Dell will have officially followed the advice he once gave to Apple: “Shut it down and give the money back to the shareholders.”
The irony doesn’t get much thicker.
This will also mark the end our long-running, “Apple now worth X times Dell’s market value” articles.
Boom, you got him, Steve!
[Thanks to MacDailyNews Readers “Fred Mertz” and “Jack F.” for the heads up.]
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So sad. So very, very, sad. Its the end of an era, and I mourn.
Oh the things that could have been. Now I will never live to see the day when the MDN Dell value counter reads “Apple worth 50x Dell”
You may still be able to do that. Once you back out cash on hand, Mikey’s shares, debt financing (assumption of existing debt and payables you are left with new monies coming from Silver Lake Partners, MSD Capital and a loan from MSFT. In this transaction the buyout is really the monies provided by Silver Lake Partners, MSD Capital and MSFT. There’s your valuation. If Dell were to cease operations Mikey’s shares would have no value (a very real likelihood without the buyout) and the cash would not have covered the debt and payables.
Saw this and had to check the date to see if it was April already
Good for the sharehders
god damn it I miss steve…
1
On a positive note, he took his own advice.
Dell is an honorable man.
He insulted Apple, Steve and the Apple base. However anyone who sticks to their word and philosophy, however wrong, is still honorable. You can trust he will follow though with what he says.
Now the bloggers, analysts and market manipulators have not a single ounce of honer among them. The bunch is a seething blob of puss and sludge.
I hope Dell, can find its niche and last another 100 years, quietly and peacefully. Hopefully Acer or Lenovo won’t try to mess with them.
I seriously doubt that Mr. Dell took this step out of a ‘sense of honor.’ He did it to regain majority control and he intends to make a lot of money as a result.
This buyout is actually evidence of Mr. Dell’s failure to competently fulfill his fiduciary duty to all Dell shareholders over the past decade.
MDN, I usually love your takes… But, how is a private equity deal to purchase outstanding Dell stock from shareholders (at a 25% premium) to take the company private in any way like Mikey’s advice to Apple to “shut it down and give the money back to the shareholders”?
I mean, I love schadenfreude as much as any other Apple fan, but I think this is really reaching. They think the market is undervaluing the company, so they’re buying it back. Sorry, but that’s vastly different from “shut it down and give the money back to the shareholders.”
Dell is one inch from shutting down the consumer PC side of his business and, today, he inked a deal to “give the money back to the shareholders.”
What part of this don’t you understand?
I don’t know that they’re “one inch away from shutting down the consumer PC side of the business”, do you? What part of “private investors paid $24 billion for a stake in the company” do you not understand?
I am with you ecrabb this is nto following his advice Dell is still a strong company with plenty of oppurtunity. I don;t blame them for wanting out of the bull that wall street pulls with these companies. Apple should do the same instead of losing $250 per share because of bull that wall street is slinging!
Dell is going to go through a major restructuring, and most importantly doesn’t want it’s financial and operational information made public. You just can’t get away from the comparisons, shrinking revenues, profits, etc. It is such bad publicity that it would kill their strategy of getting out of the hardware business and getting into the data center business.
Microsoft as a partner is curious. My guess is once the transition out of hardware is complete, Micro$oft will buy out the remaining software house.
I was looking forward to MDN’s take. “Boom, you got him, Steve!” was perfect. 🙂
The end of “Apple now worth so many times” nonsense is certainly worth celebrating.
The world has changed, good luck to him.
Yes, let’s kill the “Apple now worth ___ times than Dell” posts. We’ve beaten this proverbial dead horse to death. Move on…
With the recent drop in AAPL, I was wondering if we would be getting updates going the other direction: now worth 35x Dell, now worth 34x Dell, etc.
Good point. Those updates just kind ceased …
Give it a few years, and you’ll be hearing of bankruptcy proccedings happening to Dell.
My, this is an occasion. You know Mikey that bitter taste in your throat? It’s kind of wrapped around your uvula…that’s what’s left of your pride 🙂
Too bad Steve didn’t live to see this….
An investment by Microsoft of 2b is equivalent of 20 million copies of Windows 7.
Micheal Dell will do just fine with this: say he comes out owning 10% of Dell: Dell computers makes 2.8 billion a year, 10% of this is 280 million per year. That ain’t chump change. As stated above the stock is undervalued and the big boys are taking it private. It is how it’s done.
My work computer is a Dell: it is seriously marginal, a productivity killer, and that my friends, is the real crime here. Oddly, my corporate I.T, gets credit for buying a Dell because management only sees that the Dell computer is “reliable”. What management doesn’t see is the loss in productivity. And THAT, my friends, is how I.T. is done in 2013, Sad.
the ratio of Apple stock price to Dell stock price is above 33 at this moment.
I don’t agree: Dell is not “shutting it down.” He is doing what he can with his company to make it succeed. Stock market manipulation that is affecting Apple is affecting him as well. While I have no particular interest in his company I don’t find it wise to taunt those who are down, or to minimize the contributions that others make.
Yeah but the feeling is Dell = DCW and is on that slippery slope. At the very least it appears to be disappearing fast from plain consumer sight, soon to be a trivia question.
Dell has always been the single biggest proponent of “the race to the bottom” — make things as cheaply (in all connotations of that word) as possible and sell them as cheaply as possible. Dell had no chance of winning that game long term — absolutely no chance.
This is why anyone proclaiming that Apple *must* come out with cheap knock-offs of its own products before someone else does is just plain asinine. For several years Dell beat all other PC vendors with in its race to the bottom. However, others, from HP to Lenovo to Acer realized that there was a bottom below which things were not sustainable. Dell still plunged downward. It has finally, truly caught up with them.
Wall Street is beating up Apple for gross margins slipping below 40%. Dell’s PC sector has historically had gross margins below 20%. How is that sustainable long term? Answer: It isn’t.
The day Apple joins any race to the bottom (whether it’s with Macs or iPods or iPhones or iPads) will be the true start of Apple’s decline. Here’s hoping that never happens.
I wouldn’t get too arrogant about it. Apple’s lost a third of its market value in the last 6 months, and is in the process of making choices that may (or may not) alienate some of its consumer base going forward. The lesson to be learned by and from all these tech giants (Sony, HP, Dell, Gateway, etc.), is that nothing lasts forever, and even when you’re careful and diligent you can end up blind-sided. Even Apple was once on the verge of death, and had some lucky breaks and good timing to allow it to survive and rebound. Sometimes taking the lead gets you the crowd of followers, and sometimes it leaves you alone in the cold, with nothing to eat but crow and your own foot.
Except that Apple doesn’t deserve to have a third of it’s market value erased as the company continues to be spectacularly successful despite the pundits predicting doom ‘n gloom. The problem is everything looks rosy and rosier for the future. Hard to believe how much analysts seem to be on a mission to take Apple down just because they THINK Apple should be done and hey let’s move on to the next thing. Oh contraire mon frere.
… Market Value … what about its Real Value? People who follow the market look at various indicators when figuring what to value a stock. P/E is one of these, and AAPL’s ratios are both admirably low. Debt service is another – AAPL doesn’t HAVE any, instead it has a pile of cash. Name Recognition and Value are two more – both are in good territory.
AAPL’s Market Value is well under what all these standards would suggest. This was true at $700 a share, as well. Market Prices are gambles taken by gamblers. Don’t place TOO much stock in them.
MDN, let’s try not to be stupid here. Dell did NOT shut down, nor did it give money back to the shareholders. They exchanged public investors for private investors, so they still have shareholders and they’ll still be selling crappy computers, etc.
I’m seriously hoping that for $2B Steve Ballmer is getting to help plan Dell’s future!
Jim, I’m with you on this motion. I do hope Steve Ballmer will have a prominent position at the new PRIVATE DELL. His advice and leadership will be needed 😉
I can’t stop reading that headline… over… and over…
“Shut it down, and give the money back to the shareholders” is what’s happening, just not on that order.
Adios you assdumb fuck Michael Dell. Eat shit and remember to shut your fucking mouth next time you address Apple folks, you little cocksucker.
+1
If you mistakenly click on Michael Dell’s face in the pic of the article, it takes you to a terrifying page with just that pic there. It’s scary.
Steve. Ask God for a one day Pass. Please. We want to see you enjoy DELL sucking big time!
With rescue funding as loan from MS (how much was that again?), Dell will make the next Win 8 Server line for MS.
Oh yeah – http://news.yahoo.com/microsoft-defends-frayed-pc-ecosystem-2-billion-dell-034900316–finance.html
Back At You Michael. BAM! 😆