Dell gives the money back to the shareholders, goes private in $24.4 billion deal

“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.”

Michael DellDas 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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42 Comments

  1. 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”

    1. 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.

    1. 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.

      1. 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.

  2. 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.”

    1. 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?

      1. 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?

        1. 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!

    2. 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.

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