When in February the news arrived that Michael Dell (photo ©mikeandryan), founder and CEO of Dell Inc., wanted to buy back his company, it seemed just a matter of time before the deal could be formalized. Instead, it took months of offers and counter-offers before he could see the end of it. Now the transaction has been completed and under the terms of the agreement Dell’s shareholders will receive $13.75 in cash per share plus a special dividend, again in cash, of $0.13 per share. The total transaction amount is $24.9 billion.
Michael Dell made an initial bid for a slightly lower total along with Silver Lake, an equity firm, and the participation of Microsoft with $2 billion. Soon, however, a complaint arrived from Southeastern Asset Management, a company that owned a portion of Dell’s shares that believed that their price wasn’t high enough.
The real dispute, however, arrived when Carl Icahn, a high-profile investor well-known because he purchases big slices of companies that he thinks aren’t well managed or are undervalued, opposed the deal with Michael Dell. Icahn also looked for parners to raise the capital to prepare a counteroffer.
Carl Icahn found the support of other shareholders who were against Dell going out of the stock market and become again a private company owned by its founder. In the end, it was a matter of money because Icahn and the other opponents argued that the company’s shares were worth much more than Michael Dell wanted to pay them.
At one point, Carl Icahn threatened to take legal action that would have blocked any deal for years but he probably had to admit that his idea was a bit risky, even considering the shrink in the PC market. In the end, he and the other shareholders who opposed the deal still obtained from Michael Dell a price per share a bit higher than what they were originally offered.
In early October it became clear that Michael Dell would be able to buy back his company together with his partners and yesterday came the official announcement of the closing of the deal. At the Dell Technology Camp event, where the company displays its latest offers, Michael Dell provided some clues about his intentions by saying that he won’t abandon the PC market. Now the company should strengthen its offer of software solutions, in particular at enterprise level.
Of course, Michael Dell’s statements show optimism. The current PC market, however, is more complex than ever, so his work will be very complex. He may have the best long-term plans but he’ll have to be really ready to change them at any time to respond to any change that could occur in a market so variable. It won’t be easy even without the shareholders breathing down his neck.
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