Dell goes Private-Finally!

Finally Michael Dell and his private partner - Silver Lake has managed to bring in the much needed sanity into the buyout plan that was mired in protracted shareholder battles driven by billionaire investor Carl Icahn. Dell has just announced that the shareholders have approved the deal and its going private as announced earlier. 

Thanks to Icahn who backed off from his ‘leveraged buyout plan proposal' last week on the pre-text that he cannot defeat the deal and that set the ball rolling in Michael Dell's favor

Dell in a statement today said, "Based on a preliminary vote tally from the special meeting of stockholders on September 12, 2013, Dell stockholders have approved the proposal in which Michael Dell, Dell's Founder, Chairman and CEO, will acquire Dell in partnership with global technology investment firm Silver Lake Partners. In connection with the transaction, Dell stockholders will receive $13.75 in cash for each share of Dell common stock they hold, plus payment of a special cash dividend of $0.13 per share to stockholders of record as of a date prior to the effective time of the merger, for total consideration of $13.88 per share in cash."

The agreement also guarantees the regular quarterly dividend of $0.08 per share would be paid to holders of record as of a date prior to closing. The total transaction is valued at approximately $24.9 billion.The transaction is expected to close before the end of the third quarter of Dell's FY2014, subject to the satisfaction of customary closing conditions, including regulatory approval. Dell will continue to be headquartered in Round Rock, Texas.

A Rocky Deal from the start...

It all began when Michael Dell first approached Dell's Board of Directors in August 2012 with an interest in taking the company private. Led by Lead Director Alex Mandl, the Special Committee retained independent financial and legal advisors J.P. Morgan and Debevoise & Plimpton LLP to advise the Special Committee with respect to its consideration of strategic alternatives, the acquisition proposal and the subsequent negotiation of the merger agreement. Ever since Dell's founder Michael Dell announced his intention to make the company private together with private equity firm Silver Lake and fixed the deal price at $ 13.65 per share summing to $ 24.4 bn it has gone into some rough weather with section of shareholders. During the deal's ‘go shop' period, many other potential investors have evinced keen interest participating in the deal and Dell's biggest stakeholder and owner of Icahn Enterprises, Carl Icahn has from the beginning challenged the deal offer price and said it was way to undervalued and has termed that Dell's shareholders will defeat the deal.

Up Ahead...

But Dell has lost too much time on the deal and now with the shareholders vote, the biggest challenge for Dell is to become level playing with IBM, HP and Lenovo which had clearly benefitted in many different ways in the last two quarters cashing in on the flux created by for and against arguments. For instance in February this year HP took a dig at Dell's private move and said, " "Dell has a very tough road ahead. The company faces an extended period of uncertainty and transition that will not be good for its customers. And with a significant debt load, Dell's ability to invest in new products and services will be extremely limited. Leveraged buyouts tend to leave existing customers and innovation at the curb. We believe Dell's customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity."

What do you think - Can Micheal Dell take his company to new heights and defy the critics?