By Saabira Chaudhuri
Dell Inc. (DELL) confirmed it has agreed to be taken private by
a group led by Michael Dell in a deal valuing the computer giant at
$24.4 billion.
"We can deliver immediate value to stockholders, while we
continue the execution of our long-term strategy and focus on
delivering best-in-class solutions to our customers as a private
enterprise," said Mr. Dell in a prepared statement. "Dell has made
solid progress executing this strategy over the past four years,
but we recognize that it will still take more time, investment and
patience, and I believe our efforts will be better supported by
partnering with Silver Lake in our shared vision."
Shares were halted in recent trading. Through Monday's close,
the stock has risen 42% in the past three months.
Mr. Dell--along with private-equity firm Silver Lake
Management--will offer Dell's holders a per-share price of $13.65,
a 25% premium above the level shares traded last month ahead of
media reports about a potential deal.
Mr. Dell, who owns about 14% of Dell's shares, will continue to
lead the company as chairman and chief executive. He will continue
to hold a significant stake in Dell by contributing his shares of
Dell to the new company, as well as making a substantial additional
cash investment.
The transaction will be financed through a combination of cash
and stock contributed by Mr. Dell, cash funded by Silver Lake, cash
invested by MSD Capital, L.P., a $2 billion loan from Microsoft
Inc. (MSFT), rollover of existing debt, as well as debt financing
that has been committed by four banks, and cash on hand.
Dell will continue to be based in Round Rock, Texas. The deal is
expected to close in the second quarter of Dell's 2014 fiscal
year.
The merger agreement provides for a "go-shop" period--initially
for 45 days--during which Dell can actively solicit alternative
proposals.
Dell's market capitalization, which once topped $100 billion,
had shriveled to about $19 billion before news of the talks broke.
The company has been pushing to transform itself from once dominant
PC maker to an enterprise services company as the market for PCs
has stalled.
Going private allows Mr. Dell to continue re-orienting it around
hardware, software and services for businesses, without having to
worry about keeping up quarterly earnings during the process.
--Ben Worthen and Anupreeta Das contributed to this story
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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