Dell and Silver Lake Partners would acquire outstanding shares for $13.65 per share.
Mark Brohan , Research Director
After 17 years as a public company, computer maker and marketer Dell Inc. is making plans to go private.
Dell, No. 5 in the 2012 Internet Retailer Top 500 is evaluating going private under the terms of $24.4 billion deal in which founder Michael Dell and equity investment firm Silver Lake Partners would acquire all outstanding shares of Dell stock for $13.65 per share.
A special committee of the Dell board of directors began exploring strategic options in August when Dell, who also serves as CEO, expressed interest in taking the company private. Before any final deal is closed the Dell board will conduct a “go shop” process, offering other companies 45 days to submit alternative proposals.
Dell says going private will expedite the company’s strategic plan to invest more in computer services businesses and initiatives aimed at serving large companies and government agencies. “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 says.
Dell has been making a series of acquisitions in recent years to diversify its computer networking business. The most recent was in November when Dell acquired Gale Technologies, a provider of cloud computing applications, for an undisclosed sum. But the biggest acquisition took place in July when Dell acquired Quest Software, an information technology application developer for more than 100,000 businesses worldwide, in a deal valued at $2.4 billion. With Quest, Dell says it now operates a $1.4 billion software business.
By going private Dell says the company can accelerate its business plans by working with Silver Lake, a private equity firm with assets of $14 billion that specializes in technology. The company’s investment portfolio includes Chinese e-commerce company Alibaba Group, Groupon Inc., SunGard Data Systems and others.
Dell is scheduled to report its year-end financial results on Feb. 19. For the first nine months Dell reported an increase in sales of 8.0% year over year to $46.04 billion from $42.62 billion and a 23.8% decline in net income to $2.31 billion from $3.03 billion.
With 2011 web sales that declined 4.4% to $4.60 billion from $4.81 billion in 2010, Dell accounted for about 16% of all Top 500 computers and electronics retailer sales of $28.85 billion. With, Apple Inc., with Internet Retailer-estimated 2011 web sales of $6.66 billion, accounted for the largest share of all category sales, at about 23.1%.