Dell Buyout: Michael Dell Prevails in $24.8 Billion Private Equity Buyout

After seven months of largely public warfare with activist investors Carl Icahn and Southeastern Asset Management, Dell (DELL) founder Michael Dell and Silver Lake Partners finally prevailed, winning shareholder approval Sept. 12 of their $24.8 billion private equity buyout of the company.

At a special meeting at Dell’s headquarters in Round Rock, Texas, shareholders voted on Michael Dell’s proposal, which he sweetened under pressure to $13.75 a share—later adding a special 13 cent dividend and guaranteeing investors an 8 cents per share Q3 regular dividend—in a trade for a favorable alteration in the voting rules that ultimately paved the way for his victory.

Shareholder voting on Michael Dell’s offer had been postponed three times as he and Silver Lake scrambled to land the votes to win. This past Monday, Icahn bowed out of the fight, calling it “impossible” for him to win. And, based on preliminary results of Thursday’s vote, Michael Dell appears to finally have secured the buyout he sought. He is expecting to finalize the funding by Sept. 23 and close the transaction by Nov. 1. At closing, Michael Dell will own 75 percent of the privately held firm.

In a conference call on Thursday, Michael Dell called the vote a “great outcome for our customers and our company.” He said he intended to return “entrepreneurial spirit” to the company, focusing on cloud computing, Big Data and security, specifically investing in enterprise solutions and services using research and development resources and key acquisitions.

Dell also said that the newly private company also will invest in growing its channel partner relationships, tapping into emerging markets and putting money into growing its PC, tablet and virtual computing business.

“As a private company, Dell will be able to pursue long-term strategy and increase the likelihood of our success,” he said.

Brian Gladden, Dell’s chief financial officer (CFO), said the changes “will take time and patience” but offered the company now is “uniquely positioned” to address IT challenges, pointing specifically to the vendor’s PartnerDirect program.

“You’ve seen a broad commitment to expanding our partner program on global basis,” he said. “That is an important element of our growth strategy. The relationships we have with our channel partners are important and many customers view them as a critical route to market. You’ll be seeing more of the same commitment we’ve shown over the past few years.”

With the fight for control of the company now out of the way, it will be interesting to watch how quickly Michael Dell is able to transform Dell to focus on advanced technologies and enterprise solutions. And, it will be illuminating to see the rate at which customers regain confidence in the vendor.

Gladden suggested the new Dell will pare its workforce, although he declined to provide details. “There are clearly places where we will realign resources,” he said. “That’s what any company does.”