Dell is a done deal.
After weeks of speculation about taking the Round Rock, Texas vendor private, Dell Inc. officials announced Tuesday morning the company had reached a definitive deal to be acquired by founder and CEO Michael S. Dell and the venture firm Silver Lake Partners in a deal estimated at $24.4 billion.
The buyback, which reportedly includes a $2 billion investment by Microsoft Corp., ends 25 years of public trading of Dell stock and frees Deel to transform and innovate free of pressure from Wall Street investors. Under the terms of the agreement, Dell stockholders will receive $13.65 in cash for each share of Dell common stock they hold, 25 percent above the stock’s value when trade rumors began circulating in early January, the company said.
“I believe this transaction will open an exciting new chapter for Dell, our customers and team members,” Michael Dell said in a statement. “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,” Dell said. “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.”
Going private is something Dell has flirted with before. One of CEO Michael Dell’s chief complaints has been that Wall Street won’t allow companies to transform; they seek short-term results even when they compromise long-term objectives. As a private company, Dell will have more latitude to execute strategic plans and transform the company into an enterprise portfolio vendor with hardware, software, cloud computing and professional services.
Greg Davis, vice president and general manager of Dell global channels, assured partners Tuesday that Dell’s burgeoning channel efforts will remain solidly on track in the newly private vendor organization.
“As Dell enters this exciting new chapter, our commitment to channel partners does not waiver,” Davis said in an e-mail to Channelnomics. “As a private enterprise, we will continue to execute our strategy of delivering best-in-class solutions and growing our channel relationships.”
Just how a Microsoft investment in Dell will affect its other OEM relationships remains unclear, however. Microsoft rankled longtime PC partners, most notably Acer, when it released the Surface tablet in competition with their Windows 8 mobile devices. Hewlett-Packard Co. is Microsoft’s largest OEM partner, and the two companies have substantial joint-ventures in cloud computing and professional services. Microsoft’s tying up with Dell could further strain relations with these and other strategic vendors.
In a press release announcing the deal, Dell officials said the vendor will “continue to deliver the superior solutions, services and experiences that our customers have come to expect. We are committed to completing this transaction as seamlessly as possible such that our customers are not impacted in any way.
“Dell has always been focused on delivering a best-in-class customer experience and our top priority is to ensure that customer needs are met,” the statement read. “Our potential new owners are equally dedicated to winning in the marketplace, offering innovative products and solutions and providing a superior customer experience.”
Silver Lake Managing Partner Egon Durban called Michael Dell “a true visionary and one of the preeminent leaders of the global technology industry.”
“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,” Durban said.
The deal marks the largest leveraged buyout since the 2007 takeover of Hilton Hotels by the Blackstone Group.
This story has been updated to include comments from Dell global channels vice president and general manager Greg Davis.
Leave a Reply