SAN FRANCISCO (AP) - Slumping personal computer maker Dell is bowing out of the stock market in a $24.4 billion buyout that represents the largest deal of its kind since the Great Recession dried up the financing for such risky maneuvers.
Dell stockholders will be paid $13.65 per share to leave the company on its own. That’s 25 percent more than the $10.88 the stock was going for before word of the buyout talks trickled out last month. But it’s a steep markdown from the shares’ price of $26 less than five years ago, when the company’s eponymous founder Michael Dell returned for a second go-round as CEO.
Dell shares rose 11 cents to $13.38 per share in morning trading, indicating that investors don’t believe a better offer is likely.
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.
Once Dell’s sale is finalized, its stock will stop trading on the Nasdaq Stock Market nearly 25 years after the Round Rock, Texas, company raised $30 million in an initial public offering of stock. Microsoft Corp. is helping the deal along by lending $2 billion to the buyers, which include investment firm Silver Lake.
The company will solicit competing offers for 45 days.
The IPO and Dell’s rapid growth through the 1990s turned its founder into one of the world’s richest people. His fortune is currently estimated at about $16 billion. Michael Dell, who owns nearly 16 percent stake in the company, will remain the CEO after the sale closes and will contribute his existing stake in Dell to the new company.
The deal is the largest leveraged buyout of any type since November 2007 when Alltel Corp. sold for $25 billion to TPG Capital and a Goldman Sachs subsidiary. Within a few months, the U.S. economy had collapsed into the worst recession since World War II.
Leveraged buyouts refer to deals that saddle the acquired company with the debt taken on to finance the purchase.
Like other PC makers, Dell has seen revenue shriveling and its stock sinking amid worries that the company might not be able to regain its technological edge.View Entire Story
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