Dell going private in $24.4B deal

Dell chairman and chief executive Michael Dell will Dell chairman and chief executive Michael Dell will remain at the helm when his company goes private in a $24.4 billion deal. Photo Credit: Getty Images, 2011

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SAN FRANCISCO -- 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.

The complex agreement announced Tuesday will allow Dell Inc.'s management, including founder Michael Dell, to attempt a company turnaround away from the glare and financial pressures of Wall Street.

Dell stockholders will be paid $13.65 per share. That's 25 percent more than the stock's price of $10.88 before word of the buyout talks trickled out three weeks ago, but it's a steep markdown from the shares' price of $24 six years ago.

Dell shares rose 15 cents to close at $13.42 Tuesday, indicating investors don't believe a better offer is likely.

Michael Dell, the company's largest shareholder, is throwing in his 14 percent stake and an undisclosed sliver of his $16-billion fortune to help finance the sale to a group led by the investment firm Silver Lake.

Software maker Microsoft, which counts Dell among its biggest customers, is backing the deal by lending $2 billion to the buyers. The remaining money for the acquisition is being borrowed through loans by several banks, saddling Dell with an estimated $15 billion in debt that could raise doubts about its financial stability among its risk-averse corporate customers.

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.

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The shift has weakened longtime stalwarts such as Dell, fellow PC maker Hewlett-Packard Co., chip maker Intel Corp. and Microsoft Corp.

Michael Dell, 47, is betting his company will be able to evolve into a more diversified seller of technology services, business software and high-end computers without having to pander to the stock market's fixation on whether earnings are growing from one quarter to the next. "We recognize that [transformation] will still take more time, investment and patience," he said in a statement.

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