With Icahn Gone Shareholders Approve Dell’s Privatization

Dell’s (NASDAQ:DELL) shareholders approved the $25 billion privatization deal on Thursday, September 12. Under the deal, Michael Dell, in partnership with technology investment firm Silver Lake Partners, will acquire all the stocks of the company. Shareholders will be paid $13.75 per share, an increase from the original offer as well as an additional cash dividend of $0.13 per share for a total payout of $13.88 per share. This marks an end to the seven month long battle that has seen the shareholders meeting postponed three times as Michael Dell and Silver Lake struggled to round up the needed votes to support the deal.

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Reason For The Deal

The company that started out as a PC maker has made a dozen of acquisitions to fill out its hardware, software and service offering to focus on enterprise services. While the company continues to report profits, the transition from PC to enterprise has not yet yielded strong financial results. Investors have not only lost patience, but also value in this transformation process.

By taking Dell private, Michael Dell hopes to restructure the company away from the public eye and the Wall Street. The consortium proposes to transform Dell into an end-to-end information technology solutions provider by focusing on converged infrastructure solutions, cloud solutions, application development and consulting. It also states that executing the new strategy will require at least three to five years, and need additional investments that could weaken earnings for two or more years.

Michael Dell has maintained that the company’s PC and enterprise business will remain intact under the Dell-Silver Lake buyout offer.  The deal is expected to close by the end of this fiscal quarter in November.

We currently have a $13.60 price estimate for Dell, which is in line with the current market price.

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