Welcome!

SDN Journal Authors: Yeshim Deniz, Liz McMillan, Elizabeth White, Pat Romanski, TJ Randall

Related Topics: @CloudExpo, Java IoT, Microservices Expo, Containers Expo Blog, @DXWorldExpo, SDN Journal

@CloudExpo: Article

Dell to Go Private in $24.4 Billion Deal

Silver Lake Management is putting an unstated amount believed to be around a billion dollars in the buyout

After 25 years as a public company, the Dell board met Monday night to approve an offer to take the company private for $24.4 billion.

The deal, which values Dell at $13.65 a share, was announced Tuesday morning. The stock closed at $13.27 Monday, down 2.6%.

Stockholders still have to approve the buyout. The agreement gives the company 45 days to "go shop" and find a better deal. It would mean a $180 million termination fee.

Taking Dell private is supposed to give the one-time PC leader now under pressure from Apple and the tsunami it released the chance to get into mobile computing. It also wants to catch up with the cloud and sell to the enterprise.

Silver Lake Management is putting an unstated amount believed to be around a billion dollars in the buyout, Microsoft another $2 billion in what was called a loan. Microsoft won't get a board seat, but it is expected to get Dell to sell more of its software.

Founder Michael Dell, 47, who will remain chairman and CEO, has pledged his 14% stake in the company, worth over $3 billion, and will top it up with a reported $700 million in cash from his private investment firm, less than previously speculated, to give him majority control of the company.

The announcement said "Mr. Dell recused himself from all board discussions and from the board vote regarding the transaction." He first broached the idea to the board last August.

The billions the company has in the bank, reportedly including money from offshore accounts, will be used to pay stockholders and $15 billion in debt from four banks has been arranged to keep the company afloat. Those banks include BofA Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets.

The price was described as a premium of 25% over Dell's closing share price of $10.88 on January 11, the last trading day before rumors of a possible going-private transaction were first published; a premium of approximately 35% over Dell's enterprise value as of January 11; and a premium of approximately 37% over the average closing share price during the previous 90 calendar days ending January 11.

In a canned statement Michael Dell said, "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."

It's utterly unclear if Dell, which once had a market cap of $100 billion, can reinvent itself and recapture an edge with the new strategy. It's unknown what Michael might do to right the ship. Observers think Dell could become a one-stop technology shop but has to make the pieces work together. The company is expected to still sell PCs no matter what. Its shipments were down 12% last year presumably due to smartphones and tablets.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


CloudEXPO Stories
SYS-CON Events announced today that CrowdReviews.com has been named “Media Sponsor” of SYS-CON's 22nd International Cloud Expo, which will take place on June 5–7, 2018, at the Javits Center in New York City, NY. CrowdReviews.com is a transparent online platform for determining which products and services are the best based on the opinion of the crowd. The crowd consists of Internet users that have experienced products and services first-hand and have an interest in letting other potential buyers learn their thoughts on their experience.
Everyone wants the rainbow - reduced IT costs, scalability, continuity, flexibility, manageability, and innovation. But in order to get to that collaboration rainbow, you need the cloud! In this presentation, we'll cover three areas: First - the rainbow of benefits from cloud collaboration. There are many different reasons why more and more companies and institutions are moving to the cloud. Benefits include: cost savings (reducing on-prem infrastructure, reducing data center foot print, reducing IT support costs), enabling growth (ensuring a highly available, highly scalable infrastructure), increasing employee access & engagement (by having collaboration tools that are usable and available globally regardless of location there will be an increased connectedness amongst teams and individuals that will help increase both efficiency and productivity.)
Jo Peterson is VP of Cloud Services for Clarify360, a boutique sourcing and benchmarking consultancy focused on transforming technology into business advantage. Clarify360 provides custom, end-to-end solutions from a portfolio of more than 170 suppliers globally. As an engineer, Jo sources net new technology footprints, and is an expert at optimizing and benchmarking existing environments focusing on Cloud Enablement and Optimization. She and her team work with clients on Cloud Discovery, Cloud Planning, Cloud Migration, Hybrid IT Architectures ,Cloud Optimization and Cloud Security. Jo is a 25-year veteran in the technology field with tenure at MCI, Intermedia/Digex, Qwest/CenturyLink in pre-sales technical, selling and management roles.
Founded in 2000, Chetu Inc. is a global provider of customized software development solutions and IT staff augmentation services for software technology providers. By providing clients with unparalleled niche technology expertise and industry experience, Chetu has become the premiere long-term, back-end software development partner for start-ups, SMBs, and Fortune 500 companies. Chetu is headquartered in Plantation, Florida, with thirteen offices throughout the U.S. and abroad.
SYS-CON Events announced today that DatacenterDynamics has been named “Media Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY. DatacenterDynamics is a brand of DCD Group, a global B2B media and publishing company that develops products to help senior professionals in the world's most ICT dependent organizations make risk-based infrastructure and capacity decisions.