Silver Lake prevails in $24.9bn Dell deal

The tech-focused private equity firm and the PC-maker’s founder have been working since February to reach an agreement with Dell’s shareholders.

Silver Lake Partners will take PC manufacturer Dell private in a deal valued at $24.9 billion, according to a statement from the company’s special committee following a preliminary shareholder vote.

Silver Lake and Dell founder Michael Dell began their fight to take the tech giant private in February when Silver Lake set a benchmark price of $24.4 billion or $13.65 per share, well above Dell’s closing share price of $10.88 on the last trading day before the take-private rumors began.

The initial bid was only the first step in a long and protracted process, however.In March, the Blackstone Group and Dell activist investor Carl Icahn each submitted rival proposals to buy the company. Both bids topped Silver Lake’s offer, though presented different deal structures—Blackstone offered $14.25 per share and Icahn proposed $15 per share for about 58 percent of the company. 

Silver Lake’s buyout of Dell is expected to close before the end of Dell’s fiscal 2013 third quarter, after which the company’s shareholders will receive $13.75 in cash for each share of Dell common stock they hold. Shareholders who owned stock in the company prior to the merger will also receive a special cash dividend of 13 cents per share. The agreement also includes a regular third quarter dividend of 8 cents per share for shareholders owning stock prior to closing, according to the statement.

The majority of all Dell shareholders voted in favor of the take-private deal, including those who did not vote. About 65 percent of shareholders who voted approved the deal, according to a source familiar with the deal. 

“I am energized to continue building Dell into the industry's leading provider of scalable, end-to-end technology solutions,” said the company’s founder and chief executive officer Michael 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.”

Silver Lake did not return a request for comment by press time. 

One month before the original shareholder vote was set to take place in July, Silver Lake and Dell boosted their offer price to $24.6 billion or $13.75 per share. The 10 cent increase was accompanied by a change in voting rules that would have made it easier for the Silver Lake and Dell to gain shareholder support. The proposed rules would not have counted shareholders who did not vote. Dell’s special committee denied the rule change, but moved the record date for the shareholder vote, so more shareholders could be included. 

Silver Lake initially refused the terms, but later came to an agreement with Dell’s special committee and Michael Dell. In exchange for a higher offer price – the $13.88 price shareholders approved Thursday – the special committee approved the new shareholder voting rules and scheduled the vote for 12 September. 

“By voting in favor of the transaction, the stockholders have chosen the best option to maximize the value of their shares,” chairman of the Dell special committee Alex Mandl said in the statement. 

Icahn ended his fight with Silver Lake and the special committee last week.