Nasdaq, Say Good-Bye to Dell
Dell (NASDAQ:DELL) has gone private in a $24.4 billion deal orchestrated by its founder and the private-equity firm Silver Lake. The computer company, which has struggled to fight against the changing technological trends dominating the industry, announced Tuesday that the buyers’ consortium agreed to pay $13.65 a share in cash for the business. The offered price represents a 25 percent premium to the stock’s closing price of $10.88 per share share on January 11, the day before the sale negotiations were made public.
Founder and Chief Executive Officer Michael Dell will contribute his 14 percent stake in the company toward the leveraged buyout, and add additional cash through his private investment firm MSD Capital. Further funding will come from Silver Lake’s investment of $1 billion and a loan of $2 billion from Microsoft (NASDAQ:MSFT), which agreed to the deal in order to shore up one of its most important business partners.
The company’s board of directors voted on the deal Monday night. However, the vote excluded Michael Dell. “Mr. Dell recused himself from all Board discussions and from the Board vote regarding the transaction,” stated the company in a press release announcing the deal.
Michael Dell began the company in his college dormitory room in 1984, and it eventually grew into one the world’s largest computer manufacturers. But competition from other personal computer companies and the transition away from desktop computing towards increased smartphone and tablet use has eroded his business. As a private company, without shareholders, Dell will have much more control to engineer a turnaround. He has angled for such a deal since last August, when he first approached the board regarding a leveraged buyout, and it is Mr. Dell’s most drastic attempt to reform his business.
Following Mr. Dell’s appeal to the board of directors last year, a special committee was formed to ensure that a management buyout was in the best interest of the company and its shareholders; JPMorgan Chase (NYSE:JPM) and the law firm Debevoise & Plimpton acted as advisers. The independent investment bank, Evercore Partners, was also hired by the board to guard against any allegations of self-dealing by Michael Dell.
“The special committee and its advisers conducted a disciplined and independent process intended to ensure the best outcome for shareholders,” Alex Mandl, the head of the Dell independent committee, said in a statement. “Importantly, the go-shop process provides a real opportunity to determine if there are alternatives superior to the present offer from Mr. Dell and Silver Lake.”
But to best Dell’s offer, any prospective investor that makes a successful bid during the go-shop period will face a $180 million termination fee.
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