Tech giant Dell announced Tuesday that it plans to go private after signing of a $24.4 billion deal with a private-equity firm Silver Lake.
Tech giant Dell is looking to open a new chapter for the company and is in talks of going private with a $24.4 billion deal. The deal states that all common stock holders will receive $13.65 in cash for each share of Dell they own. This is a 25 percent premium from the Dell's closing price of $10.88 on Jan. 11. The deal will also receive a $2 billion loan from Microsoft Corp. as backup finance.
"I believe this transaction will open an exciting new chapter for Dell, our customers and team members," Michael Dell said in a statement. "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."
Michael Dell currently owns 14 percent of the company's shares and will remain Chairman and CEO of the company even after the new terms are implemented. An email that was sent out to all employees of the company stated that the deal will still take "time, investment and patience" to come through. The deal is yet to receive the approval of its stock holders, which, according to Sterne Agee analyst Shaw Wu, may not happen because "there's practically no premium."
After this, Dell will have another hurdle to cross - pushing its new business initiatives in a brutally competitive marketplace.
"Dell has a very tough road ahead," Hewlett Packard said in its statement. "The company faces an extended period of uncertainty and transition that will not be good for its customers. And with a significant debt load, Dell's ability to invest in new products and services will be extremely limited."
