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Dell Shareholders Approve $25 Billion Buyout to Go Private
September 12,
2013 at 7:15 am PT
Michael Dell and the private equity firm Silver Lake have prevailed in their
14-month-long effort to convince shareholders in the computing company Dell
to take the company private in a leveraged buyout.
The results of a shareholder vote were just announced moments ago at a
special meeting of shareholders in Round Rock, Texas. The final vote tallies
haven’t been released yet, but CNBC, citing sources familiar with the
result, have pegged the vote in favor at 65 percent to 35 percent. A final
tally will be read out a little later as the meeting is still underway.
The final buyout price is $13.75 share and includes a 13-cent a share
special dividend for a total price of $13.88, or $24.9 billion. The deal
also guarantees an eight cent per share quarterly dividend when Dell next
reports earnings in November.
The vote brings to an apparent close a rancorous process during which
numerous Dell shareholders lined up to oppose Dell and Silver Lake.
The process began in June of 2012 when the investment firm Southeastern
Asset Management, a longtime Dell investor and until recently its numbers
two shareholder, first contacted Michael Dell about the possibility of going
private. Dell held his first conversations with people from Silver Lake at
an technology industry conference in Aspen, Colo. the following month.
Ironically, Southeastern became one of the leading voices in opposition of
the transaction that ultimately emerged. Soon the activist investor Carl
Icahn had picked up the torch, and bought out much of Southeastern’s stake,
and became Dell’s number two investor after Michael Dell himself.
Icahn and Southeastern proposed their own alternative transaction, which
they described as a structured recapitalization. Under their plan, they
would have bought up 72 percent of Dell shares and left the remaining stake
as a publicly traded stub. They further proposed to take on new debt and to
pay a special dividend to shareholders and to issue warrants for the
purchase of additional
shares within a seven-year window. They argued that the
Dell-Silver Lake proposal undervalued the company and locked out current
investors from benefiting from any future turnaround of the company that
might occur.
For months the wrangling between them threatened to result in a split board
of directors and a
prolonged proxy fight
for control of the company as neither side had sufficient support
among shareholders to take full control.
Icahn took his fight against the transaction public both via numerous open
letters to shareholders, and to his relatively new Twitter account where at
times he needled Dell management with
labored verse.
Earlier this week, Icahn
conceded that he had
lost the battle to take control of Dell. However he has said he
intends to ask a court in Delaware to appraise the company’s value in hopes
of
forcing a higher payout.
Given the size of his holdings, Icahn has already
realized a $70 million
profit on his Dell shares.
The company has been struggling with the long-term decline in the personal
computer business while at the same time trying to transform itself into a
bigger player in enterprise hardware, software and services. But those
efforts at transformation have been uneven and the majority of Dell’s
revenue is either derived either directly from PCs or from ancillary
products like desktop displays and and accessories.
The press release confirming the deal just crossed the wires. Here it is:
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Dell Stockholders
Approve Merger Transaction
ROUND ROCK,
Texas–(BUSINESS WIRE)–
Dell today announced
that, based on a preliminary vote tally from the special meeting of
stockholders, 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 for the fiscal third quarter 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 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.
“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,” said Michael Dell, chairman and CEO of Dell. “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.”
Mr. Dell continued,
“I would like to thank our 110,000 team members around the world who,
throughout this process, have remained focused on serving our customers
with unity, purpose and pride. As our company continues to expand its
enterprise solutions and services business, our team members will be
Dell’s most valuable asset and the key to our future success.”
“Over the course of
more than a year, the Special Committee and its advisors conducted a
disciplined and independent process to ensure the best outcome for Dell
stockholders,” said Alex Mandl, chairman of the Special Committee formed
to evaluate the transaction and other strategic alternatives. “By voting
in favor of the transaction, the stockholders have chosen the best
option to maximize the value of their shares. I want to thank my fellow
Committee members and the entire Board for their diligent and tireless
efforts on behalf of Dell stockholders, and the stockholders themselves
for the careful consideration they gave to this important matter.”
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. |
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