Dell Going Private


Code : GOV0062

Year :

Industry : IT Hardware

Region : United States

Teaching Note:Not Available

Structured Assignment :Not Available

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Introduction: On February 5, 2013, Dell Inc. (Dell) announced a definitive merger agreement with its largest shareholder, Chairman, CEO and Founder - Michael Dell (Michael) and Silver Lake Partners (Silver Lake). Under the agreement, Michael and Silver Lake would purchase the outstanding shares of Dell from shareholders at US$13.65 per share and delist the company to make it a private held company under a Leveraged Buyout (LBO) transaction. At a price of US$13.65 per share, the LBO deal size would be around US$24.4 billion which would make it the largest private equity backed buyout deal (if completed) since the Alltel Corporation deal of US$25.7 billion in May 2007. On the occasion, Michael said, "I believe this transaction will open an exciting new chapter for Dell, our customers, and team members. We can deliver immediate value to stockholders, while we continue the execution of our long-term strategy and focus on delivering best-in-class solutions to our customers as a private enterprise."

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According to Lynn Stout , the number of public listed US companies had gone down from 8,823 in 1997 to 5,401 in 2008. So what Dell wanted to do was not new but it was the biggest technology company which was deciding to go private after a 25-year run on the exchange since June 1988. However, the question on everyone's mind was why Michael had decided to take Dell private.

A Special Committee of independent directors was set up under the leadership of lead independent directors Alex J. Mandl (Mandl) to ensure a smooth and fair go-private transaction. On the working of the Special Committee, Mandl said, "The Special Committee and its advisors conducted a disciplined and independent process intended to ensure the best outcome for shareholders. Importantly, the go-shop process provides a real opportunity to determine if there are alternatives superior to the present offer from Mr. Dell and Silver Lake."...

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