Dell goes private in $24.4 billion deal
New York, February 6, 2013
Dell 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.
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 January 11. 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, 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, said a statement.
Dell recused himself from all board discussions and from the board vote regarding the transaction.
A special committee was formed after Dell first approached the board in August 2012 with an interest in taking the company private. Led by lead director Alex Mandl, the committee retained independent financial and legal advisors J P Morgan and Debevoise & Plimpton to advise the committee with respect to its consideration of strategic alternatives, Dell’s proposal and the subsequent negotiation of the merger agreement.
The merger agreement provides for a so-called “go-shop” period, during which the 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.
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.”
Following completion of the transaction, 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. – TradeArabia News Service
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