Silver Lake, Dell In $24.4 Billion Buyout Deal

Feb 5 2013 | 1:56pm ET

Silver Lake Partners and Dell Inc. founder Michael Dell announced this morning that they would take the computer-maker private in a $24.4 billion leveraged buyout.

The private equity firm and Michael Dell are joined in the deal by Microsoft Corp. and Michael Dell's hedge fund, MSD Capital, as well as a consortium of investment banks providing financing. The bidding group has offered $13.65 per share for the company, a 25% premium to their price when news broke about a possible deal.

The $24.4 billion deal would be the fifth-largest buyout in history, and the largest since 2007. Dell said it "immediately delivers value to shareholders" and would give Michael Dell, who founded the company 30 years ago and took it public 25 years ago, more time to turn around its flagging business.

"I believe this transaction will open an exciting new chapter for Dell, our customers and team members," Michael Dell said. "Dell has made solid progress executing this strategy over the past four years, but 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."

Only Dell itself, Michael Dell, his hedge fund and Silver Lake will put up cash in the deal. Microsoft will make a $2 billion loan, while Bank of America Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets will provide financing. Dell will also roll over existing debt, and Michael Dell will contribute his 14% stake in the existing company.

Silver Lake is thought to be contributing $1 billion.

The deal is expected to close in the second quarter of Dell's 2014 fiscal year. There will be a 45 day "go-shop" period during which Dell can seek other offers, but none are seen as forthcoming.

The buyout announcement ends a period of several years during which Dell has fended off several private equity approaches. Last month, it was said to be in "serious" talks with Silver Lake and TPG Capital, which is not part of the deal.

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