Dell: Going Private Is Best Option for PC Maker
The $24.4 billion deal is meeting shareholder resistance, but Dell officials said all alternatives were explored and this one made the most sense.Dell executives, seeing growing discontent among some shareholders over their $24.4 billion leveraged buyout plan, said in a regulatory filing Feb. 11 that after a review of all options, taking the world's third-largest PC maker private made the most sense. The special committee created by Dell's board of directors "considered an array of strategic alternatives," going so far as to hire a "prominent management consultant to help it assess the company's strategic position," Dell officials said in the filing with the Securities and Exchange Commission (SEC). "Based on that work, the board concluded that the proposed all-cash transaction is in the best interests of stockholders," the company said. "The transaction offers an attractive and immediate premium for stockholders and shifts the risks facing the business to the buyer group. In addition, and importantly, the go-shop process provides stockholders an opportunity to determine if there are alternatives that are superior to the present offer." After weeks of speculation, Dell executives announced that they are partnering with private equity firm Silver Lake Partners and Microsoft to take the company private, a move that will enable founder and CEO Michael Dell to speed up the transformation of his namesake company that he began in 2007 when he returned as the top executive.
The company is in the process of changing over from a PC and server maker to an enterprise IT solutions provider, a move that that included more than a dozen acquisitions in such areas as storage, networking, software and services. The transformation also has come as the worldwide PC market has begun to contract, putting pressure on Dell's financial numbers.