http://seattletimes.com/html/businesstechnology/2020289034_apusdellacquisition.html
The complex agreement announced Tuesday will allow Dell Inc.'s management, including eponymous founder Michael Dell, to attempt a company turnaround away from the glare and financial pressures of Wall Street.
Dell stockholders will be paid $13.65 per share to leave the company on its own. That's 25 percent more than the stock's price of $10.88 before word of the buyout talks trickled out three weeks ago. But it's a steep markdown from the shares' price of $24 six years ago when Michael Dell returned for a second go-round as CEO.
Dell shares rose 15 cents to close at $13.42, indicating that investors don't believe a better offer is likely.
The chances of a successful counter offer look slim, given the forces lined up behind the current deal.
Michael Dell, the company's largest shareholder, is throwing in his 14 percent stake and an undisclosed sliver of his $16 billion fortune to help finance the sale to a group led by the investment firm Silver Lake.
"We recognize that (transformation) will still take more time, investment and patience, and I believe our efforts will be better supported by partnering with Silver Lake in our shared vision," Michael Dell said in a statement.
Software maker Microsoft, which counts Dell among its biggest customers, is backing the deal by lending $2 billion to the buyers.
Dell's decision to go private is a reflection of the tough times facing the personal computer industry as more technology spending flows toward smartphones and tablet computers. PC sales fell 3.5 percent last year, according to the research group Gartner Inc., the first annual decline in more than a decade. What's more, tablet computers are expected to outsell laptops this year.
Michael Dell, 47, is betting that his company will be able to evolve into a more diversified seller of technology services, business software and high-end computers without having to pander to the stock market's fixation on whether earnings are growing from one quarter to the next. Dell expects to complete the sale by the end of July.
The proposed deal could face resistance from longtime stockholders who believe Dell is still worth at least $15 per share. Anticipating such criticism, Dell's board is allowing 45 days for potential suitors to submit higher bids.
If approved, the deal will likely give Michael Dell his last chance to restore the luster to a company that established him as one of the world's most respected entrepreneurs. Dell started selling PCs out of his dorm room while he was still a freshman at the University of Texas. His legacy has been tarnished in the past decade as HP and other rivals outmaneuvered his company. In recent years, Dell has struggled to cope with the upheaval unleashed by the popularity of smartphones and tablet computers.
The buyout marks a new era for a company created in 1984 by a college kid with a $1,000 investment. The company, initially called "PCs Limited," would go on to revolutionize the PC industry by taking orders for custom-made machines at a reasonable price - first on the phone, then on the Internet.
But Dell began to falter as other PC makers were able to lower their costs. At the same time, HP and other rivals forged relationships with stores that gave them the advantage of being able to showcase their machines. By 2006, HP had supplanted Dell as the world's largest PC maker.
Underscoring the concerns about Dell's additional debt, Standard & Poor's said it is considering downgrading the company's "A-" credit rating to "BB" or "B."
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