Dell To Go Private As Michael Dell, Microsoft, Silver Lake, and MSD Capital Put In Their Money For It

Posted Feb 5, 2013

Dell has gone private and is being taken off the stock market.  The company is being financed with cash and equity from Dell founder Michael Dell and funds from Silver Lake and MSD Capital.  Microsoft is giving Dell a $2 billion loan.

The company is also getting debt financing from several banks.  Dell shareholders will receive $13.65 per share of common Dell stock that they hold, which is 25% up from Dell’s closing share price of $10.88 as of January 11th. That was the last day prior to rumors of the company going private.  This values the deal at about $24 billion.

Board members met last night to vote on the deal.  Top executives at the company said that Michael Dell is a man that is “increasingly worried about his legacy.”

Microsoft helped broker the deal and offered $2 billion to facilitate the deal.  Likely this deal will ensure Microsoft gets preferential treatment of Windows on Dell systems over Android or Chrome OS.  Below is a statement that Microsoft gave about the deal:

Microsoft has provided a $2 billion loan to the group that has proposed to take Dell private. Microsoft is committed to the long term success of the entire PC ecosystem and invests heavily in a variety of ways to build that ecosystem for the future.

We’re in an industry that is constantly evolving. As always, we will continue to look for opportunities to support partners who are committed to innovating and driving business for their devices and services built on the Microsoft platform.

Dell is struggling on the public markets.  The company lost over a third of their value in 2012.  After going private, they will not have to report quarter-to-quarter results from shareholders.  Michael Dell has been investigating the idea of going private since August 2012.

Here is what Michael Dell had to say about the deal:

I believe this transaction will open an exciting new chapter for Dell, our customers and team members. 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. 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. I am committed to this journey and I have put a substantial amount of my own capital at risk together with Silver Lake, a world-class investor with an outstanding reputation. We are committed to delivering an unmatched customer experience and excited to pursue the path ahead.

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