Delisting of former market leader aimed at opening new chapter

Dell unveils $24.4 billion private equity buyout


Dell unveiled plans to go private Tuesday in a $24.4 billion deal that would give founder Michael Dell a chance to reshape the former leading PC maker away from the spotlight of Wall Street.

“I believe this transaction will open an exciting new chapter for Dell, our customers and team members,” Michael Dell said in unveiling the deal with equity investment firm Silver Lake, backed by a $2 billion loan from Microsoft.

The company said it had signed “a definitive” agreement to give shareholders $13.65 per share in cash — a premium of 25 percent over Dell’s closing share price Jan. 11, before reports of the deal began to circulate.

The move, which would delist the company from stock markets, could ease some pressure on Dell, which is cash-rich but has seen profits slump while it tries to reduce dependence on the slumping market for personal computers.

The plan is subject to several conditions, including a vote of unaffiliated stockholders. It also calls for a “go shop” period to allow shareholders to seek a better offer.

The company founder said Dell has made progress in its turnaround strategy “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.”

Under the terms of the deal, Dell, who currently owns some 14 percent of the company’s common shares, would remain chairman and chief executive and boost his stake with “a substantial additional cash investment,” a company statement said.

Additional cash for the deal will come from Silver Lake, a major tech investment group, and MSD Capital, a fund created to manage Michael Dell’s investments. The plan also calls for a $2 billion loan from Microsoft, rollover of existing debt, and financing committed by Bank of America-Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets.

The Texas-based computer maker, which Dell started in his college dormitory room, once topped a market capitalization of $100 billion as the world’s biggest PC producer.

Dell is now the No. 3 global PC maker behind Hewlett-Packard and Lenovo with a market share of 10.6 percent in the fourth quarter, according to the latest report from market tracker IDC.