Shareholders of Dell Inc. Thursday approved a takeover offer worth $24.9 billion launched by its founder and Chief Executive Officer, Michael Dell, allied with the investment fund Silver Lake Partners, giving them a the chance to revive the third largest global manufacturer of PCs as a private company.
Dell shareholders will receive $13.75 in cash for each common share they hold, plus a special dividend of $0.13 per share. The total transaction value is $24.9 billion. Final figures have not yet been officially released, but according to CNBC, the offer made by Michael Dell and Silver Lake was approved by 65 percent of Dell shareholders.
The victory of the founder is ending a dispute that lasted for seven months between Michael Dell against billionaire Carl Icahn and Southeastern Asset Management Inc . The takeover of the third largest computer manufacturer in the world is the biggest leverage buyout after Blackstone Group LP bought Hilton Worldwide Inc. in 2007 and took it private.
Michael Dell, who founded Dell in 1984, proposed in February to the company private so that it can turn into an IT service provider for businesses, similar to IBM model, given that sales of PCs are in constant decline.
Wednesday, rating agency Standard & Poor ‘s downgraded Dell four notches to ‘BB minus’ from ‘BBB’, citing concerns that the takeover by the Chief Executive Officer Michael Dell will create a more indebted capital structure and will reduce the flow cash, which will affect the company’s ability to invest in new businesses and technologies.
“There’s a lot of CEOs that have tried to take companies private to get away from the market. It’s an uphill battle,” said Michael Cusumano, a professor at the Massachusetts Institute of Technology’s Sloan School of Management.
Analysts at CLSA estimates that the market for personal computers will decline by 7 percent this year and by 4.5 percent in 2014.
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