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. 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….

  2. 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.

  3. 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.

  4. 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.

  5. 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.

    1. 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.

    2. 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.

  6. 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.

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