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Dell Going Private in 2014 After $24.4 Billion Transaction

Posted on February 5, 2013 12:55 PM by Rob Williams
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Dude, you’re going private! A long-standing rumor has proven true today as Dell announced that its founder and CEO along with Silver Lake investors would be acquiring the company, removing it from public trading and allowing it to focus on whatever it feels it needs to. The deal will see that each stockholder will receive $13.65 per share – up from the January 11th closing price of $10.88, and +37% over the average from the previous 90 days from that date.

Dell_Round_Rock_HQ

For a large company like this to suddenly go private is noteworthy, as it’s clear that Michael Dell and his team feel it’s necessary in order to get back on the path of growth and success. In recent years, the company has had a difficult time latching on to certain markets, and that’s a potential killer in the rise of rising mobile platforms.

Mr. Dell had this to say on the move: “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.

The deal is set to conclude before the end of Q2, 2014, so the fruits of the move are not going to be seen for quite some time. We hope to see some exciting years ahead for the company, and have doubts that this will prove to be a poor decision.


  • e550mercedes

    Interesting, Michael Dell has decided to take his own advice:

    http://news.cnet.com/2100-1001-203937.html

    • http://www.facebook.com/deathspawner Rob Williams

      Talk about putting your foot in your mouth.

  • madmatTG

    I don’t understand how this works. If I owned stock in Dell how can they legally take it away?

    • http://www.facebook.com/deathspawner Rob Williams

      I’m not an investor, but I just assume that’s part of the agreement. I am sure there are a ton of little rules that would either disallow or allow Dell to make the move, but for whatever reason it’s able to pay a premium and go private.

    • http://techgage.com/ Brett Thomas

      I’ve tried to write a complete reply to this twice but the page keeps reloading and losing it, so here’s a condensed version:

      You as a shareholder (even with many thousands of dollars invested) are a small drop in a large pool. No company could ever possibly get work done if it had to listen to every drop individually, and so the board of directors was created. Your biggest role as a shareholder is to approve each and every member of that board as their terms come up for re-election, or to suggest new names to be part of the board. The board then functions as the go-between between the company’s active management (CEO et al) and its shareholders, and has the job of balancing the company’s long-term goals with shareholder demands, rights and expectations. That way, you distill all those drops down to a few knowledgeable voices that can sit in the same room and hash out benefits and detriments.

      In this case, the board looks at the deal provided by Michael and his friends, and determines whether it is in the best interest of the shareholders at large. If they feel that Dell’s stock could not realistically hit the price that the offer is willing to pay and that the company would stand a better shot by removing the board’s (and thus shareholder) influence (don’t forget, they’re firing themselves with this vote, so they take it pretty seriously), they approve the transaction. Then Michael gives the company financing to buy its shares back from the open market and invalidate them, and to issue him new stock.

      • http://techgage.com/ Rob Williams

        Great insights, thanks Brett.

      • madmatTG

        So, say I’m holding 300 shares of Dell stock they come forcibly remove them from me? Or just make them valueless should I deign to turn them in? That’s what I don’t get, how can it be legal to forcibly remove something from you that you fairly purchased? I only ask because I’m sure there are folks out there that bought shares at higher prices (Dell has slid far over the past few years) and have held onto them in hopes of a rebound. It seems pretty much a big FU to the shareholders.

        • http://techgage.com/ Brett Thomas

          Unfortunately, buying your shares for higher and hoping for a rebound isn’t sufficient to stop a multi-billion dollar transaction. For some shareholders, it sucks. For others, it’ll be a win.

          Shares are issued by the company, and the company at large chooses what to do with them. It’s complicated to explain the legality (but it is totally legal and not nearly such an FU as you might envision), but the process is pretty simple. In this case, they “invalidate” the shares, making them worthless, and then resign their CUSIP number and SEC filings, meaning you can’t trade them on any major exchange. This is a restructuring much like going through bankruptcy would be.

  • http://techgage.com/ Jamie Fletcher

    Sometimes, in order to grow, a company needs to stop looking at quarterly revenue. If a company is not growing consistently and at speed, investors will pull out, reducing available financing. To me, this move feels like Dell has something big planned, and that something would be killed by investors due to a lack of early performance.

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