Dell Inc to go private in $24.4 billion deal, Michael, Silver Lake pay $13.65 per share, Microsoft $2 bn
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Dell's sale is the second highest-priced leveraged buyout of a technology company, trailing the $27 billion paid for First Data Corp. in 2007.
The deal is the largest leveraged buyout of any type since November 2007 when Alltel Corp. sold for $25 billion to TPG Capital and a Goldman Sachs subsidiary. Within a few months, the U.S. economy had collapsed into the worst recession since World War II.
Dell's decision to go private is a reflection of the tough times facing the personal computer industry as more technology spending flows toward smartphones and tablet computers. PC sales fell 3.5 percent last year, according to the research group Gartner Inc., the first annual decline in more than a decade. What's more, tablet computers are expected to outsell laptops this year.
The shift has weakened long-time stalwarts such as Dell, fellow PC maker Hewlett-Packard Co., chip maker Intel Corp. and Microsoft Corp.
Michael Dell, 47, is betting that his company will be able to evolve into a more diversified seller of technology services, business software and high-end computers without having to pander to the stock market's fixation on whether earnings are growing from one quarter to the next. Dell expects to complete the sale by the end of July.
Once the deal closes, Dell's stock will stop trading on the Nasdaq Stock Market 25 years after the Round Rock, Texas, company raised $30 million in an initial public offering of stock.
The proposed deal could face resistance from long-time stockholders who believe Dell is still worth at least $15 per share. Anticipating such criticism, Dell's board is allowing a 45-day period for potential suitors to submit higher bids.
Dell's board "is saying that no better option exists,'' said Bill Nygren, manager of the Oakmark Fund and affiliates, which own about 25 million shares of Dell stock. "Should we hear evidence to the contrary, we'll raise a ruckus.''