Dell cleared to go private for $24.9B after shareholders vote in favor of deal

Dell cleared to go private for $24.9B after shareholders vote in favor of deal

Summary: UPDATED: Dell shareholders have voted to take the company off the stock market, in one of the largest privatization deals in modern technology history.

Dell headquarters at Round Rock, Texas (Image: Dell)

Dell will go private for $24.9 billion, following a shareholder vote in favor of the deal on Thursday.

The final deal is pegged at $13.75 a share, including a 13 cents a share dividend. At $13.88 per share, that amounts to $24.9 billion. The deal also means that when the company announces its next earnings report in November, shareholders will receive an 8 cents per share quarterly dividend.

Overall, the price is a premium on the $24.4 billion, or $13.65 per share, that was first proposed in February.

A breakdown of the overall vote has not yet been announced. 

In prepared remarks, company founder and chief executive Michael Dell said he was "pleased" and "energized" to continue building up the PC maker. "As a private enterprise, with a strong private-equity partner, we'll serve our customers with a single-minded purpose and drive the innovations that will help them achieve their goals," he said.

By closing, Michael Dell along with investors will own aproximately 75 percent of the company.

According to the company, one of the main reasons behind the successful bid to take the company private was to accelerate the company's forward-looking strategy. 

The deal is expected to close by Dell's fiscal third quarter next year, ending November 1, 2014. 

'Not giving up on the PC any time soon'

On the analyst call, Michael Dell said the company will continue to expand its enterprise and services development in additional acquisitions and further investment. In spite of the PC market downturn, he said Dell will "expand our presence in emerging markets," as well as "investing in PCs, tablets, and the virtual computing market."

He noted though the recent PC market troubles, the company isn't giving up on the PC any time soon. That said, Dell noted its enterprise business continues to grow each year, and will become increasingly important as the firm dives deeper into new technologies.

The firm's strategy will remain on the most part the same, focusing on much of the same things, citing customer feedback.

Dell executives on the call said they could not at this time comment on any layoffs as a result of the deal, however.

Months in the making

The deal took months to come to fruition, spearheaded by Michael Dell. The path has not been an easy one, with attempts to derail the process or take the company out of the hands of the computer maker's founder.

Numerous Dell shareholders have opposed the Dell-Silver Lake buyout. Most notable of all was Carl Icahn's attempt, in conjunction with investment firm Southeastern Asset Management, to take on Dell's bid. But he hit a brick wall after his own bid was criticized by the company's special committee, tasked with finding the best bidder for the firm, as "inconsistent."

Earlier this month, Icahn said he was done with his bid following news that the company's board approved the Dell-Silver Lake deal.

It comes at a time when the company is struggling with its core PC manufacturing business. Dell lost 3.9 percent in share according to Gartner, or 4.2 percent according to IDC figures, in the last quarter alone. The global worldwide PC market is expected to decline by 10 percent through at least 2014, as the race to compete in the tablet space reaches its peak.

Update at 12:30 p.m. ET: Added further details from the analyst call.

Topics: Dell, PCs

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  • Proof that Wall Street can be very bad for business

    Either wall street needs to back away for the insane profit expectations or more and more companies will go this way. The expectations of double-digit growth and profits that seem to pervade Wall street from the earlier booms times will ultimately crush us. Businesses can't realistically provide that level of gains continuously but they still demand it. So, companies are forced to try to exit the stock market or else they're forced by the shareholders to make up the profits elsewhere, usually in cuts of quality, service, or employees. That spiral is not economically sustainable and you then get the type of economy we're in now. Barely able to gain traction.

    In other words, the very market that's supposed to help us grow is slowly strangulating us in favor of a rich few. Joy.

    Let's hope Dell succeeds in their private enterprise and that more companies follow in their lead. Of course, the private model only works well when the owners aren't greedy themselves. Catch-22.
    • Very well said.

      But keep in mind we are Wall Street.
      • I would like to believe that...

        ...but it's not really true. Wall street is owned by a rich minority. Every company has a reasonably small group of majority shareholders. It is they who make the decisions. The "vote" for the rest of the shareholders is merely an illusion, unless they have the ability to rally all those small stakeholders, which is almost impossible with limited resources.

        For example. Wal-mart, the biggest company in the U.S. The Walton family owns about half of Walmart stock (insiders). Nothing happens if they don't want it to. Do you really think anyone could overrule that?

        Another Example: Microsoft. Almost 10 percent is held by insiders. Almost 70 percent is held by institutions. Those institutions' investments are run by a minority of people in the companies. So in the end, while not like Wal-mart where a family owns it, a group of investment firms do, not "the people". The choices of the investment managers decides whether the stock is attractive or not.
        • My sister isn't rich...

          and she owns stock in various corporations. You don't have to be rich to be a stock holder - you only have to be smart enough not to waste your money on getting almost no interest from the banks.

          She held on to her stocks during the crash, and is now reaping the rewards. You only lose money when you panic an get out after everything drops. The market always returns. Many good companies were paying high dividends even through the hard years, even though their stock price dropped.

          This news about Dell is very important - because it could prove once again that privately held companies can out maneuver public held companies almost every time. The only big companies that beat that trend are places like Apple when the founder is still running it. Now that he is gone - Apple stock don't look so good - however that too can change tomorrow, and it the end your money is still better held in companies that at least pay dividends, even if they are not under priced.
          • My sister is rich...

            but she still doesn't have enough stock in any one company to alter corporate direction. I think that is the point Zorch is making. These companies are controlled by a very small precentage of the population. Small, individual shareholders essentially own non-voting stock because of the difficulty in getting them all to unite to oppose the largest shareholders.
    • You were aware that a lot of this insane profit expectations is the direct

      result of government regulations mandating publicly held companies report earnings quarterly instead of annually, right?
  • Going private is a smart move by Dell.

    The number of government regulations you can remove from your financial practices by going private would amaze you.
    • I'd believe that..

      in a heart beat!
  • Back when Dell was young

    And the real alternative to Compaq for a quality low priced system where customer service reps spoke the Queens English, well I used to buy their products.

    My how things have changed.
    • They spoke the queens english in Punjab province ...

      before Britain went all socialism and decline and lost their empire and navy.

      As a former British colony who broke away from the king, you would think I would find Indian independence a good thing, but after my recent business trip there..not so much...ITS CALLED ICE, people! Look into it!
  • Well done, Dell

    May you go privately forward, in peace and prosperity.
  • World's largest starup

    That's what internal Dell communications to employees are saying today: Dell is now the world's largest startup! Dell will be more nimble now.
  • Lesson: Investors want profit, not simply revenue.

    Investors want profit. This latest vote for privatization shows that investors are willing to do anything to get profits.

    IBM gave up on the PC, Server industry nearly 10 years ago, and is one of the few tech companies that is really driving trends in the industry instead of reacting to them.

    The fact that Dell is going private, in itself, reveals that there are some painful changes in the works.
  • Some INSIDE info. . .

    1.) Dell sends there PC's to be assembled in mexico.
    2.) These PC's hit the market BUT customers send them back to Dell because they breakdown rather quickly.
    3.) PC's are sent to Texas for repairs by Americans.
    4.) Texas Dell repair facility is closing at the end of this year. Americans loosing jobs.
    5.) Dell is moving to mexico so mexicans can build more PC's cheaper. (!?!)
    So the bottom line is, sell your stocks NOW!
    • Mexico...So?!?!

      I am biased as I used to work for Dell, but their build quality after moving part of their build process to Mexico was second only to Apples based on Gartner's Reviews of business/public systems. That was 2011-2012. Also, Dell was the last manufacturer to move PC production out of the US. Apple & HP had done so 5-6 years prior and undercut prices forcing Dell into moving in kind.
  • maybe

    Now maybe Dell can get back to running the company
    John Thorne