updated 04:49 pm EDT, Tue October 29, 2013
Michael Dell, Silver Lake take Dell private for $25B
The deal to take computer maker Dell private was completed on Tuesday, with company founder Michael Dell partnering with private equity firm Silver Lake to buy Dell for roughly $25 billion. As a result of the privatization, Dell will be delisted from the Nasdaq exchange at the close of Tuesday's trading, according to Reuters. Tuesday's news caps a months-long saga that has seen the deal countered and at times on the verge of collapse.
At their peak, Dell shares traded above $50 as the consumer PC market boomed. This transaction will see Dell and Silver Lake paying $13.75 and a 13-cent special dividend per share in the struggling computer manufacturer. That amounts to $24.9 billion for the company, which has struggled in recent years due to the disruption of the traditional PC market by smartphones and tablets.
Led by Apple's iPhone and iPad, as well as other devices running Google's Android operating system, mobile devices have captured consumer interest, leading to lower shipments of notebooks and desktops. The tablet segment alone is expected to equal the PC market in terms of shipments some time in 2014, and PC manufacturers have been largely unable to gain traction in that growing segment. Other manufacturers have shifted focus to enterprise services in light of changes in the consumer market, and Dell's privatization is in the same vein.
Reportedly, the privatized Dell will see a massive overhaul in its operations. The company will look to provide computing services to corporations, leveraging its expertise in manufacturing to provide businesses with large computer orders at a cost-effective price point. Dell and his Silver Lake partners believe the changes necessary to reverse the company's slide cannot be effected while subject to scrutiny from shareholders.
Michael Dell's bid to take the company he founded private met with opposition from activist investor Carl Icahn, who believed that Dell and Silver Lake's offer for the company was too low. Icahn eventually ended his opposition to the company's privatization. The deal gained regulatory approval early in October, and its completion is in line with earlier time estimates.