DELL Deal Done

Tyler Durden's picture

With a modest premium over yesterday's closing price (and 25% premium to Jan 11th price), and thanks to a big hand from Microsoft (with a bridge not an equity participation), Michael Dell (and Silver Lake) are taking Dell private.


Funding by BofAML, Barclays, CS, and RBC - better hope the CLO demand keeps up. Full PR below:

Dell Enters into Agreement to Be Acquired by Michael Dell and Silver Lake

  • Dell stockholders to receive $13.65 per share in cash
  • Transaction valued at approximately $24.4 billion
  • Transaction implies a 37 percent premium over the average closing share price during the previous 90 calendar days ending Jan. 11, 2013

ROUND ROCK, Texas--(BUSINESS WIRE)--Dell Inc. today announced it has signed a definitive merger agreement under which Michael Dell, Dell’s Founder, Chairman and Chief Executive Officer, in partnership with global technology investment firm Silver Lake, will acquire Dell.

“The Special Committee and its advisors conducted a disciplined and independent process intended to ensure the best outcome for shareholders. Importantly, the go-shop process provides a real opportunity to determine if there are alternatives superior to the present offer from Mr. Dell and Silver Lake.”

Under the terms of the agreement, Dell stockholders will receive $13.65 in cash for each share of Dell common stock they hold, in a transaction valued at approximately $24.4 billion. The price represents a premium of 25 percent over Dell’s closing share price of $10.88 on Jan. 11, 2013, the last trading day before rumors of a possible going-private transaction were first published; a premium of approximately 35 percent over Dell’s enterprise value as of Jan. 11, 2013; and a premium of approximately 37 percent over the average closing share price during the previous 90 calendar days ending Jan. 11, 2013. The buyers will acquire for cash all of the outstanding shares of Dell not held by Mr. Dell and certain other members of management.

The Dell Board of Directors acting on the recommendation of a special committee of independent directors unanimously approved a merger agreement under which Michael Dell and Silver Lake Partners will acquire Dell and take the company private subject to a number of conditions, including a vote of the unaffiliated stockholders. Mr. Dell recused himself from all Board discussions and from the Board vote regarding the transaction.

A Special Committee was formed after Mr. Dell first approached Dell’s Board of Directors in August 2012 with an interest in taking the company private. Led by Lead Director Alex Mandl, the Special Committee retained independent financial and legal advisors J.P. Morgan and Debevoise & Plimpton LLP to advise the Special Committee with respect to its consideration of strategic alternatives, the acquisition proposal and the subsequent negotiation of the merger agreement.

The Special Committee also engaged a leading management consulting firm to conduct an independent analysis, including a review of strategic alternatives for Dell and opportunities for the company as a public entity, and thereafter engaged Evercore Partners.

The merger agreement provides for a so-called “go-shop” period, during which the Special Committee – with the assistance of Evercore Partners – will actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals. The initial go-shop period is 45 days. Following that period, the Special Committee will be permitted to continue discussions and enter into or recommend a transaction with any person or group that submitted a qualifying proposal during the 45-day period. A successful competing bidder who makes a qualifying proposal during the initial go-shop period would bear a $180 million (less than 1 percent) termination fee. For a competing bidder who did not qualify during the initial go-shop period, the termination fee would be $450 million.

Mr. Mandl, lead director of Dell’s Board of Directors, said: “The Special Committee and its advisors conducted a disciplined and independent process intended to ensure the best outcome for shareholders. Importantly, the go-shop process provides a real opportunity to determine if there are alternatives superior to the present offer from Mr. Dell and Silver Lake.”

Mr. Dell said: “I believe this transaction will open an exciting new chapter for Dell, our customers and team members. 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.”

"Michael Dell is a true visionary and one of the preeminent leaders of the global technology industry," said Egon Durban, a Silver Lake Managing Partner. "Silver Lake is looking forward to partnering with him, the talented management team at Dell and the investor group to innovate, invest in long-term growth initiatives and accelerate the company's transformation strategy to become an integrated and diversified global IT solutions provider."

Following completion of the transaction, Mr. Dell, who owns approximately 14 percent of Dell’s common shares, will continue to lead the company as Chairman and Chief Executive Officer and will maintain a significant equity investment in Dell by contributing his shares of Dell to the new company, as well as making a substantial additional cash investment. Dell will continue to be headquartered in Round Rock, Texas.

The transaction will be financed through a combination of cash and equity contributed by Mr. Dell, cash funded by investment funds affiliated with Silver Lake, cash invested by MSD Capital, L.P., a $2 billion loan from Microsoft, rollover of existing debt, as well as debt financing that has been committed by BofA Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets (in alphabetical order), and cash on hand. There is no financing condition.

The transaction is subject to other customary conditions, including receipt of required regulatory approvals, in addition to the Dell stockholder approvals described above. The transaction is expected to close before the end of the second quarter of Dell’s FY2014.

For further information regarding all terms and conditions contained in the definitive merger agreement, please see Dell’s Current Report on Form 8-K, which will be filed in connection with this transaction.

J.P. Morgan and Evercore Partners are acting as financial advisors and Debevoise & Plimpton LLP is acting as legal advisor to the Special Committee of Dell’s Board of Directors. Goldman, Sachs & Co. is acting as financial advisor and Hogan Lovells US LLP is acting as legal advisor to Dell. Wachtell, Lipton, Rosen & Katz is acting as legal advisor to Mr. Dell. BofA Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets (in alphabetical order) are acting as financial advisors to Silver Lake, and Simpson Thacher & Bartlett LLP is acting as legal advisor to Silver Lake.

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buzzsaw99's picture

Don't worry about Michael Dell, he got plenty. As for shareholders, fuck 'em. Chumps.

TruthInSunshine's picture

Dell = the new Gateway.

Good luck, Dell, especially with that obvious tie-in with Mr. Softy as its maker of hardware. You'll be zuning on a phat surface in no time (not that your prior hardware offerings, such as items like the Dell Streak, weren't epic already).

5 Year Chart for Dell, Dude

Lost Wages's picture

Without Dell Dude they will all become destitute.

francis_sawyer's picture

Dirty Deeds Done Dirt Cheap...

EscapeKey's picture

Well, PCs have long become commoditized. But there's still money in volume.

They do control Alienware as well, however. I have several friends who forked out extortionate amounts of money for those crash-prone pieces of shit.

flapdoodle's picture

DELL = dead man walking.

MICROSOFT = another dead man walking.

Desktops are dead and laptops moving in the same direction, if much more slowly as they are the new desktop.

I suppose DELL could build a smartphone and put W8 on it, wow! that would break out of the gate and immediately grab 2% marketshare... - and then slowly fade away.

The next Gateway indeed!

Just finished seeing a BB Z10 video comparison w/ HTC running W8 - and during the demo the W8 browser actually went belly up when pointed to a high content site! I'm glad to see Microsoft keeping up with their rich tradition in providing quality products...



EscapeKey's picture

I would buy their products, if the quality and focus were there, but the disasters that are the Surface RT/Surface Pro shows that Microsoft *really don't get it*.

I mean - FFS - Surface Pro 64GB - 41GB is reserved for Microsoft. How that can seem acceptable to anyone is beyond me.

And then there's the battery life. It's competing versus the likes of the iPad with a rough 10 hour battery life. But oh, you say, it's also a Laptop, as it has an attachable keyboard - ie, it also competes relative to the EEE Transformer Prime. Its battery life? 18 hours in total.

And the Surface Pro battery life? 5 hours. Seriously. Worse than most modern ultrabooks.

Then there's the price. They've priced it more expensively than all other tablet PCs, and most ultrabooks as well.

And finally, they're attempting to wall a garden around their OS. Oh great, it's just like Windows - but with less choice.

ebworthen's picture

Can't believe Michael Dell is putting in his own money; surprised he didn't just get Steve Ballmer from Microsoft to buy him out.

I liked Gateway better than Dell, but things move so fast in tech. and the public is fickle.

Dell should move into Server/Cloud servers and service only, the consumer side is a money vacuum.

tarsubil's picture

"Dell should move into Server/Cloud servers and service only, the consumer side is a money vacuum."


Isn't that what he is planning? Seems some recent acquisitions suggest that. Still some money to be made with PCs if he can improve the product and price competitiveness and use connections to maintain goverment contracts.

e-recep's picture

i cant belive it, either. i thought this jew, michael dell would buy gold with the money he'd get. jews love gold.

Non Passaran's picture

Hmm, few weeks ago Dell share was below $11. It's over $13.20 now.  That's not so bad.

buzzsaw99's picture

It was at 50 in 2000. You should be so lucky.

fuu's picture

Only down $50.83/share, adjusting for inflation.

Just a 78.8% loss over 12 years.

Duuuuuuuude, you got a lemon!

francis_sawyer's picture

Look on the bright side fuu... One could only come to the conclusion that there is still a booming job market for falling knife catchers...

Groundhog Day's picture

Fuck the shareholders and fuck the employees now.  Silver Lake is going to fire as many as they can and lower the salaries for as many as they can before they can slap some lipstick on this pig

spastic_colon's picture

no wonder futures are up today / sarc

Temporalist's picture

JP Morgue and Goldman Sucks are both doing financial advising...and shorting them because that's what "market makers" do.

LongSoupLine's picture

the fucking rich get richer.  Fucking recovery.

Non Passaran's picture

You mean those happy Dell shareholders who were able to sell out to the new owners?

Yes, it's funny how capitalism works that way.

buzzsaw99's picture

crapitalism means the maggot at the top puts 1/3 to 1/2 of the total market cap in his pocket then leaves the carcass to bloat in the sun.

SheepDog-One's picture

Happy-time Dell shareholder...ah so...

dwdollar's picture

Another reason not to buy stocks... as if a rational person needed another.

Mercury's picture

Because you might get taken out at a premium?

10,000 problems but that ain't a one.

buzzsaw99's picture

a premium to what? look at the chart. shareholders got taken for a ride.

Mercury's picture

...a premium to where the stock was before the company was in play.

No deal = lower
Deal = higher

What the fuck do you people want - the government to pass a law that the value of consumer electronic companies will only go up? The whole reason Dell was successful in the first place was because they were able to sell more personal computer at a lower price than the existing makers could.

buzzsaw99's picture

You are correct. Shareholders are lucky Dell didn't steal it ALL.

Mercury's picture

And which PC manufacturer would you rather see selling equipment to government agencies?

fuu's picture


hannah's picture

this kind of comment is exactly why the usa is toast. forget the pc sale, why do we have all these gov departments.



SheepDog-One's picture

'At a premium'....sure, I guess as long as the rear-view trading mirrors were set just right.

Dr. Engali's picture

It's not a premium if you're in at $13.66

dwdollar's picture

I don't buy crap where ownership rights are so fragile.

Dr. Engali's picture

They over paid for that piece of crap and  BOA is getting caught up in another shitty deal.

Id fight Gandhi's picture

Remember when he told apple to do the very same thing, give the shareholders back their money?

EscapeKey's picture

I swapped my HP Envy 17 for a Dell XPS17 L702x and couldn't be happier.

Their support sucks, however.

CaptainSpaulding's picture

I got my Dell XPS 8500 in December and i am with you. I did a fresh install of Windows 7 pro and I couldnt be happier. 

island's picture

I've been using Dell Latitudes for years.  Love them.  Dell support is a mostly a broken system.  They won't learn support from anyone at Microsoft, which is even worse.  However, maybe going private will let them stop focusing on the share price and cost cutting, and focus on building a new better Dell.  I sure hope so.

GoldmanSux's picture

Would love to see a listing of Dell's massive buybacks at much higher prices over the last decade.

buzzsaw99's picture

Timed to match insider sales too. ;)

SheepDog-One's picture


Melson Nandela's picture

Dell..what do they do besides sell crap computers to the USG ?

Tango in the Blight's picture

A friend of my had a Dell XPS laptop. Supposedly their top of the range model. Worthless piece of shit, the graphics card blew out and it had to be returned several times.

reader2010's picture

End users will likely get even shittier Dell devices and support.

virgilcaine's picture

1999 was the last good year for this garbage co. Dude your gettin a dell!.

SheepDog-One's picture problem regaining yesterdays drop in the first few minutes this morning! Sheesh.

Long-John-Silver's picture

Lap and Desk Top computers with a preloaded copy of Windoze OS are in the process of becoming the equivalent of becoming a Black and White TV. They "work" but who would buy one?


This is the future.

It's tiny, it connects to any HDTV, and it costs less than $100.


island's picture

I hope this comes to fruition - but it will need to run business software, which - unfortunately - is more or less the domain of MSFT.