Dell to become private in $24.4 billion buyout

Dell is to become a private company, following a $24.4 billion buyout led by founder Michael Dell

6 Feb 2013
Dell XPS 13

Dell, one of the biggest PC manufacturers in the world, is to become a private company following a multi billion dollar buyout by its founder Michael Dell.

The $24.4 billion deal, which still requires approval by the majority of shareholders, was brokered by Dell himself, in partnership with debt financing from several US banks, cash from private equity firm Silver Lake and a $2 billion loan from Microsoft, who is unlikely to want one of its biggest customers go out of business.

Shareholders will receive $13.65 per share owned, which is a 25 per cent premium over Dell's trading price at the time the deal was made public. It's a far cry from the 18 per cent Dell was trading at a year ago, but analysts expect a shareholder majority to agree on the price as there's pessimism that the PC industry will see growth in 2013.

The company, which was started from Dell's college dormitory, rose to become one of the biggest global PC manufacturers over the course of 24 years, before suffering from a downturn in the market as customers switched to smartphones and tablets.

There have so far been no indications as to how Dell will be run differently as a private firm, but company executives have hinted at plans to expand the company's hardware and software line-up for large companies, with the intention of challenging the likes of Lenovo and IBM.

Dell's competitors have been quick to stick the boot in, with HP - itself no stranger to financial turmoil - declaring Dell would "leave existing customers and innovation at the curb," and that it would exploit the opportunity to the fullest.

The buyout is unlikely to be finalised before the end of Dell's second financial quarter next year, but it appears the company will be taking a new direction imminently in order to save itself from the shrinking market.

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