The personal computer maker Dell is bowing out of the stock market in a US$24.4 billion buyout that represents the largest deal of its kind since the current recession dried up the financing for such risky manoeuvres.
The complex agreement, announced yesterday, will allow Dell's management to attempt a company turnaround away from the glare and financial pressures of Wall Street.
Dell stockholders will be paid US$13.65 per share to leave the company on its own, better than the US$11 level the stock was hovering at before word of the buyout talks trickled out last month, but a steep markdown from the shares' price of US$26 less than five years ago.
Once the sale to a group of investors which includes the investment firm Silver Lake is finalised, Dell's stock will stop trading on the Nasdaq nearly 25 years after the Texas-based company raised US$30 million in an initial public offering of stock. Microsoft is investing in the deal with a US$2 billion loan.
The company will solicit competing offers for 45 days.
The IPO and Dell's rapid growth through the 1990s turned its eponymous founder, Michael Dell, into one of the world's richest people. His fortune is currently estimated at about US$16 billion. Dell, who owns a nearly 16 per cent stake in the company, will remain the chief executive after the sale closes and will contribute his existing stake in Dell to the new company.
Dell's sale is the highest-priced leveraged buyout of a technology company, surpassing the US$17.6 billion paid for Freescale Semiconductor in 2006.
The deal is the largest leveraged buyout of any type since November 2007, when Alltel sold for US$25 billion to TPG Capital and a Goldman Sachs subsidiary. Within a few months, the US economy had collapsed into what would be its worst recession since the second world war.
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 per cent last year, according to the research group Gartner, the first annual decline in more than a decade. More tablet computers are expected to be sold this year than laptops.
The shift has weakened long-time stalwarts such as Dell, its fellow PC maker Hewlett-Packard, the PC chip maker Intel and the PC software maker Microsoft.