Silver Lake investors Partner Egon Durban lauded the deal for its potential to “accelerate the company's transformation strategy to become an integrated and diversified global IT solutions provider." Michael Dell, who took the company public approximately 25 years ago, said in a statement that the private proposal better positions the company to deliver on customer experience and investor value as it opens “an exciting new chapter for Dell.”
“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. Dell has made solid progress executing this strategy over the past four years, but we recognize that it 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,” he stated.
In a statement on the proposed deal, Dell representatives wrote: “We are committed to completing this transaction as seamlessly as possible such that our customers are not impacted in any way. We believe this transaction strengthens Dell’s capabilities to bring industry-leading, differentiated, simplified and easy-to-manage solutions to customers worldwide.”
Dell has dealt with a slumping PC market over the last few years. In the last year, Dell has reorganized to feature an enterprise software division and has joined the chorus of mega-vendors offering and snatching up startups in hot areas like cloud computing, advanced analytics and mobility.
Forrester Researcher Senior Analyst David Johnson wrote soon after the formal announcement that going private affords Dell the chance to relieve federal regulatory burden and gives Michael Dell the opportunity to point the company more toward customer needs. However, he notes that Dell’s existing company structure is “enormous” and poses its own challenges for merging efforts and getting unique solutions out the door.
“IT has only grown more complex. Very few companies are in the business of simplifying it in dramatic ways. Apple is one. Most others are just applying Band-Aids to a bursting piñata,” Johnson wrote in his infrastructure and operations blog. “Dell's opportunity is to double-down on simple and astoundingly innovative solutions to complex problems with a level of quality, excellence and speed that their still-hobbled public competitors can't match.”
According to the deal announced Tuesday morning, Dell stockholders would receive $13.65 in cash for each share of common stock, a premium of 25 percent more than the Round Rock, Texas vendor’s closing price on Jan. 11, the day before widespread going-private speculation started.
The deal is subject to closing conditions. Michael Dell recused himself from board discussions and the vote on the private deal, according to a Dell release. The vendor expects the deal to close in the second quarter of its fiscal year 2014. (Dell’s fiscal year end ends the Friday nearest Jan. 31 annually, with Q2 results announced in August.)
Justin Kern is senior editor at Information Management and can be reached at justin.kern@sourcemedia.com. Follow him on Twitter at @IMJustinKern.
