Dell goes private: behind the struggling computer company's $25 billion buyout

Dell just announced that the company has received "all the necessary regulatory clearances" to go ahead with its $25 billion buyout deal, funded by founder Michael Dell and Silver Lake Partnerships. Shareholders had approved the deal earlier this month by a 65 percent margin, but various federal regulators were required to sign off before it could officially proceed. The company now expects the deal to officially close before the third quarter of 2014. In an earlier statement, Michael Dell said the new ownership structure will "open an exciting new chapter for Dell."

Dell might not be interested in smartphones, but the company's planning plenty of slates. In an interview with AllThingsD, company CEO Michael Dell said that we should expect "another significant wave of tablets from us in the coming weeks." Though Dell recently dropped its Windows RT offering, we think we might know what he's talking about. On October 2nd, the company's planning to reintroduce its Venue brand, including an 8-inch Windows 8.1 tablet called the Venue 8 Pro.

The thrust of AllThingsD's interview wasn't about consumer products, though, but rather where Michael Dell intends to take the company now that Dell shareholders have approved his $25 billion offer to give him complete control. Dell says his plan is to reinvest in the company, work more closely with enterprise customers, and stay aggressive with pricing. You can read the full piece at our source link below.

Michael Dell has finally wrestled control of Dell, the company he founded, back from its shareholders. A board vote this morning ends month of speculation on whether it would approve Michael Dell's multibillion-dollar offer to take the company private. Dell's offer saw strong competition in the form of a counteroffer from "activist investor" Carl Icahn, but Icahn ultimately pulled the plug on his attempt, saying that it would be "almost impossible" to win today's shareholder vote.

The plan to take Dell private was almost approved back in July, but a series of postponements delayed the decision. Since the idea was first floated, Dell has had to up his offer, and the final agreed package is worth $13.75 per share with an additional $0.13 dividend, or a total of approximately $24.9 billion. Though the final vote hasn't been released yet, CNBC says that it's been told that 65 percent of votes were in favor of the buyout. "I am pleased with this outcome and am energized to continue building Dell into the industry’s leading provider of scalable, end-to-end technology solutions," Michael Dell says in a statement following the vote.

Carl Icahn will no longer attempt to defeat a $24.9 billion deal to take Dell private, though he maintains that Michael Dell and private equity firm Star Lake are lowballing shareholders. "We have determined that it would be almost impossible to win the battle on September 12th," Icahn wrote in a letter to shareholders today. "We therefore congratulate Michael Dell and I intend to call him to wish him good luck (he may need it)." Icahn is claiming a small victory, however; he points to the sweetened final offer from Michael Dell as proof that the company founder was feeling pressured by Southeastern. "As a result of this increase all stockholders are to receive many hundreds of millions of dollars more than the board originally accepted," he writes.

But Ichan still isn't happy with the proposal, pointing out that Star Lake is paying a price 70 percent below Dell's 10-year high of $42.38. He's also incensed with Dell's board of directors for thwarting his own bid to control the company. "The Dell board, like so many boards in this country, reminds me of Clark Gable’s last words in Gone with the Wind," he says. "They simply 'don’t give a damn.'" Icahn will continue to oppose the transaction in principle, but the last great obstacle preventing Michael Dell from taking his company private in hopes of a turnaround has been eliminated.

A meeting of Dell shareholders this morning had been expected to finally pass judgment on the protracted issue of whether to approve Michael Dell's $24.4 billion proposal to take the company private or Carl Icahn's counteroffer. Alas, the meeting only lasted a few brief moments, enough time for company director Alex Mandl to declare an adjournment of the decision until Wednesday, the 24th of July. Earlier in the week, Reuters came out with a report saying that Michael Dell did not have sufficient backing from investors to put his plan into effect, so the present delay appears to be an effort to buy more time to secure those last few votes.

Update: And another week! Bloomberg reports that Michael Dell's offer has been sweetened to mollify investors and the deadline has now been pushed to August 2nd.

Last month, Dell allowed Carl Icahn to come up with an alternative to founder Michael Dell’s proprosed $24.4 billion buyout of the company, and now he and Southeastern Asset Management are telling shareholders what they have in mind. The Wall Street Journal reports that the plan would pay $12 a share in cash or stock, and while that’s considerably lower than the $13.65 a share Michael Dell is proposing in his bid to take the company private, it would allow shareholders that don’t want to sell to hold onto their shares.

The remaining shares would remain publicly traded in what’s known as a "stub," a key feature of the deal proposed by the Blackstone Group before backing out last month. Icahn and others have maintained that Dell’s stock is worth more than what its founder is offering, and Southeastern has been vocal about its expectations for a rebound in Dell’s fortunes, writes The New York Times.

Dell indicated that it would take Carl Icahn's bid for the company seriously when it struck a deal with the billionaire investor earlier this week, and it may have more reason to do so now — multiple sources are reporting that Blackstone has now abandoned its rival offer. According to the Financial Times, Blackstone's investors weren't convinced of the deal's merits, and felt that Dell's value on the stock market is already fair. Blackstone's deal would have included an option for shareholders to hold onto their stake. With the private-equity firm seemingly out of the picture, however, Dell's committee may give further thought to Icahn's bid, and founder Michael Dell's chances of taking the company private himself have also received a boost.

The wheeling and dealing as Dell continues its plan to go private continues. Today, the company announced that it struck a deal with investor Carl Icahn that will avoid the chance of a hostile takeover while also signaling that it will take his rival bid more seriously. Icahn and his team have agreed not to purchase more than 10 percent of Dell's shares, nor will they enter into agreements with other shareholders that would give the combined partnership more 15 percent of Dell's shares — effectively limiting his ability to gather up control of the company. Dell also granted Icahn a "limited waiver" which allows him to contact other Dell stockholders about his potential bid and potentially team up with them to strengthen his offer.

It appears that Icahn traded buying power in exchange for Dell taking his alternate bid under serious consideration. If Dell's special committee believes this deal is most likely to lead to his proposal being accepted (and Icahn is willing to enter into a deal that limits his ability to buy up Dell's stock), it's possible the two groups are operating on friendlier terms to get his more favorable proposal accepted. Dell and Icahn's deal will last until either the current proposal from CEO Michael Dell and Silverlake is accepted, a superior alternative proposal is accepted, or until January 14th, 2014. Dell's buyout is still a long way from being complete, but Icahn's interest in the struggling PC maker continues unabated.

While some Dell investors have taken issue with CEO Michael Dell's proposed plan to take his company private, an SEC filing has revealed some compelling reasons for investors to think twice about protesting the move. As noted by Forbes, a filing dated March 29th includes a lengthy section where Dell outlines the "risks and uncertainties" related to continued ownership of the company's stock — it's essentially a laundry list of how the consumer tech market has changed and how hasn't quite managed to keep up.

Difficulties that Dell notes in its filing include:

As reported on Saturday, Michael Dell's attempt to take Dell private has been challenged by a pair of rival bids. In a press release this morning, Dell's board confirmed that it has received "two alternative acquisition proposals" from investment group Blackstone and "activist investor" Carl Icahn. The computer giant also published details of the bids, revealing that both offer a higher per-share price than Michael Dell's $13.65 proposal, which valued the company at $24.4 billion.

Icahn's offer includes purchasing $2 billion of the firm's shares at $15-per-share and offering $2 billion of cash equity financing. This would be in addition to the shares he and his firm currently own. The Blackstone group offer is to acquire Dell at $14.25-per-share, but includes the option for existing shareholders to remain on board.

Bloomberg is reporting that Blackstone Group has submitted a preliminary offer to buy Dell. Citing a "person familiar with the matter," the publication says the bid commits Blackstone to hold takeover discussions with the Texas computer giant. Company founder Michael Dell is currently attempting to gain shareholder approval for a deal that would see him take Dell off the market and back into private hands. Michael Dell's $24.4 billion privatization plan involves a large personal investment, as well as cash from equity firms and a $2 billion Microsoft loan.

Since the deal was made public, detractors have said that the $24.4 billion valuation of the company is too low, and major investors have signalled their intent to vote against the offer. Business magnate Carl Icahn, who reportedly owns a six percent share in the company, is rumored to be planning a rival bid of his own. Bloomberg's anonymous source says Dell has until Tuesday to respond to Blackstone's preliminary offer.

Dell's buyout deal is reportedly facing more opposition from shareholders, and competing offers could be in the works. Sources have told Bloomberg that fellow computer makers HP and Lenovo have expressed interest in buying the company at a higher price, as has Blackstone Group. The sources say HP and Lenovo are unlikely to actually pursue a bid, but their consideration will complicate Michael Dell's plan to take the beleaguered company private for $24.4 billion provided by himself, equity firms, and a Microsoft loan.

Meanwhile, prominent investor Carl Icahn — recently known for his heavy investment in Netflix — seems to have his own plans in the works. CNBC sources reported yesterday that Icahn has collected a roughly 6 percent stake in Dell, which he'll use to oppose the deal and suggest a one-time payout to investors. Dell confirmed that he is attempting to stop the company from going private, instead pushing it to refinance and pay a $9 per share dividend to shareholders. If Icahn indeed has a 6 percent share, that could make him one of the largest outside shareholders, giving him leverage.

It would seem that the "immediate value" Michael Dell says stockholders are poised to receive thanks to Dell's $24 billion privatization deal isn't proving satisfactory to some. Today, investment firm T. Rowe Price, which holds a sizable chunk of Dell stock, came out in opposition of the proposed terms. "We believe the proposed buyout does not reflect the value of Dell, and we do not intend to support the offer as put forward," said Brian Rogers, T. Rowe's chief investment officer. T. Rowe Price is believed to control approximately 4.4 percent of Dell's shares, and the company isn't alone in its concerns. Just last Friday, Southeastern Asset Management, which holds an even larger 8.5 percent stake in Dell, said it too plans to vote against the deal in its current form. Reuters reports that three other "major shareholders" are also unhappy with the Microsoft-backed buyout, which works out to $13.65 per share.

Dell will need a majority of stockholders to vote in favor of the leveraged buyout offer for its plans to become a private company to advance forward. The opposition we're seeing now doesn't necessarily spell disaster for that effort, but makes clear that investors are looking for a higher offer than the $24.4 billion put forward by Michael Dell and private equity firm Silver Lake Partners.

Update: Dell shareholders have officially voted in favor of allowing Michael Dell to buy back his company, and Dell has said he intends to focus on business and enterprise computing.

It's no secret why Dell's struggling so badly it just took a $2b loan from Microsoft and bought itself back from shareholders to become a private company: after more than a decade of effort, the company never figured out what consumers actually want beyond low prices, or why they might want it.

Following rumors of a Microsoft multi-billion dollar investment in Dell, the software giant has confirmed its moves to help take Dell private. Microsoft will invest around $2 billion in the form of a loan to Dell, a deal that was supervised by Silver Lake — the same private equity firm that helped Microsoft acquire Skype for $8.5 billion back in 2011. The loan may seem puzzling initially, given Microsoft's own Surface hardware strategy, but if you look a little deeper it's clear this is all about protection.

Microsoft faces a number of attacks on its enterprise dominance in the form of startups, technology trends, and — most importantly — competitors like Google and Salesforce. A war of words and ecosystems has erupted over the past couple of years between Microsoft and Google, and a closer look reveals it all follows protective moves by Microsoft to keep businesses on side. The latest example is Dell, but a recent acquisition of Yammer for $1.2 billion is designed to strengthen Microsoft's position in the emerging "social enterprise" trend.

Dell has officially closed a buyout of the company, taking the company off the publicly-traded stock market and into private hands. The deal is being financed by cash and equity from CEO Michael Dell, funds from investment firms Silver Lake and MSD Capital, a $2 billion loan from Microsoft, plus debt financing from a number of banks as well as Dell's cash on hand. Dell's shareholders will receive $13.65 for each share of common Dell stock they hold, up about 25 percent from Dell's closing share price of $10.88 back on January 11th, which Dell says is the last day prior to rumors of the buying starting to circulate. Those rumors have escalated in the last week, when Bloomberg and The Wall Street Journal reported that discussions to bring Dell private were serious, and that a deal could be reached in the following six weeks.

Bloomberg also reports that board members met last night to vote on the move, while the Wall Street Journal cites top execs as saying company founder Michael Dell is a man "increasingly worried about his legacy." Michael Dell has reportedly lost enthusiasm for the day-to-day running of the company since reclaiming his position as CEO of the company in 2007.

We heard last week that Dell was in talks to take the company off the publicly traded stock market, and now CNBC is reporting that Microsoft might invest in the company to make that happen. Microsoft may invest between $1 billion and $3 billion in Dell to help the company go private — and with Microsoft's interest in producing Windows 8 hardware, this deal might help bolster its hardware business down the line. Microsoft is apparently in talks with investment firm Silver Lake (the main sponsor behind the potential buy-out) as well as Michael Dell. This appears to be far from confirmed, with the companies just having conversations around the proposed deal at the moment. The talks are ongoing, and CNBC reports that there are hopes that the deal would be in place by the end of the week, but there are a lot of things that could change between now and the conclusion of a deal.