Published On: Thu, Sep 12th, 2013

Michael Dell Wins Shareholder Vote For His $24.9 Billion Bid To Privatize Dell Inc.

Michael Dell is now the happiest $24.9 billion man on earth

Computer Technology Leaders Speak At Oracle Open World ConferenceMichael Dell / getty

Earlier today this low key announcement appeared on the Dell Inc. corporate web site, :

“Based on a preliminary vote tally from the special meeting of stockholders on Sept.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”

 

A slightly more detailed accompanying press release also stated:

“The preliminary vote tally shows that the transaction was approved by the holders of a majority of Dell’s outstanding shares, as required by Delaware law. In addition, the tally shows that the transaction was approved by the holders of a majority of Dell’s shares voting for or against the matter, excluding shares held by Mr. Dell, certain of his related family trusts, Dell’s Board of Directors and certain members of its management, as separately required under the merger agreement.”

 

Michael Dell himself then commented:

“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”… “As a private enterprise, with a strong private-equity partner, we’ll serve our customers with a single-minded purpose and drive the innovations that will help them achieve their goals.”

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.”

Since Dell has a February 28th year end this means the company expects to close the deal on or before the end of November, 2013.

This has been a long journey for Michael Dell since he launched his bid earlier this year, on February 5th, 2013. Once the transaction closes there will certainly be plenty to do to make a success of the restructuring of the company he can now accomplish in private hands and away from the daily scrutiny of public markets.

Just to give him a taste of the rough ride he may now expect though, just three days ago Dell had its corporate credit rating cut to junk status by Standard & Poor’s.

S&P said in a statement with their revised rating that the privatization transaction would create a more leveraged capital structure and diminished free operating cash flow, hampering the company’s ability to invest in new businesses and technologies. S&P reduced Dell’s corporate credit rating four levels to BB – from its previous BBB with a stable outlook. This makes it officially junk status but it is likely that this was expected in what is after all a management led leveraged buy-out.

Dell plans to transform itself now that it is privatized from a dwindling business in personal computers and become, instead, a key supplier of computer systems to corporations that can run business websites, enterprise servers, cloud data centres and the like together with multiple levels of software services to go with it. Since lots of people are trying to do the same thing it is far from a slam dunk.

 

 

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