Michael Dell is doubling down on the company he founded 29 years ago as a college student.
Dell Inc. made it official Tuesday morning when it disclosed that its board of directors voted to accept a $24.4 billion buyout offer from a group of investors headed by its founder and chief executive. Silver Lake Partners, an California investment company that specializes in technology investments, is a major player in the deal.
The company expects the buyout, which would be the world's largest since before the global financial crisis of 2008, will be approved by shareholders and completed before the end of July. The deal would allow Michael Dell to continue reshaping the company without the bottom-line pressures that face publicly traded businesses. Shareholders would receive $13.65 per share from Dell, which is the largest private employer in Central Texas, with about 14,000 workers here out of a 100,000-plus global workforce.
If the buyout is completed, Dell Inc. will have two equity owners -- Michael Dell and Silver Lake -- the company said in a regulatory filing. The company also said, "We do not anticipate job eliminations as the result of the proposed transaction."
Michael Dell, who turns 48 this month, said the buyout deal would give him and senior management more time to complete a revamping effort that they started several years ago.
"Dell has made solid progress executing this strategy over the past four years," Michael Dell said in a statement, "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 are excited to pursue the path ahead."
The CEO will contribute his 14 percent ownership stake in Dell's stock to the deal and also will put in an undisclosed amount of cash. MSD Capital, Michael Dell's New York-based investment company, also will put an undisclosed amount of cash into the deal. Analysts say Silver Lake is expected to invest about $1 billion, and software giant Microsoft Corp. will contribute a $2 billion loan to the deal.
Silver Lake also arranged a consortium of banks to provide up to $15 billion in debt financing for the deal. Those banks are Bank of America Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets.
Tuesday's announcement followed three weeks of swirling rumors and reports about the proposed deal. The company said Michael Dell set the deal in motion in August, when he informed the board he was considering a buyout. Dell's board conducted "an extensive review of strategic alternatives" before deciding that the buyout was the best option for shareholders, said company spokesman David Frink. Among the options rejected by the board was the potential breakup of the company.
Some investment and tech analysts said the buyout is the best way to turn around the company, which has been plagued by falling revenue and profits, in part because of a sluggish personal computer sales market and rising Asian competition.
"The deal makes sense," wrote analyst Brian Marshall with ISI Group,
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