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Dell’s $24.4 Billion Buyout: What Silver Lake and Michael Dell Paid

Dell announced a roughly $24.4 billion buyout led by Michael Dell and Silver Lake in 2013. The offer was amended before closing, with eligible shares converted to $13.75 in cash per share.
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Dell announced a deal valued at approximately $24.4 billion on February 5, 2013, for founder Michael Dell and investment funds affiliated with Silver Lake Partners to take the company private. The initial offer was $13.65 in cash per eligible share, but the terms changed before the transaction closed: eligible shares ultimately converted to $13.75 in cash, with a separate $0.13 special dividend under the amended agreement.

What was Dell’s buyout worth?

Dell’s February 2013 announcement put the transaction’s value at approximately $24.4 billion. That headline figure describes the announced deal value; it is not the amount paid for each share. The initial per-share offer was $13.65 in cash. Dell’s February 5, 2013 announcement gave both figures.

Dell said the initial $13.65 offer represented a 25% premium to its January 11, 2013 closing price of $10.88 and approximately 37% above its average closing price over the previous 90 calendar days. Those comparisons were Dell’s calculations in its announcement, not an independent valuation.

Who led the acquisition, and how was it financed?

The buyer group was led by Michael Dell and investment funds affiliated with Silver Lake Partners. Dell’s announcement described a financing package that included buyer cash and equity, Michael Dell’s share rollover and additional investment, capital affiliated with MSDC, a $2 billion loan from Microsoft, committed bank debt, and Dell cash on hand. The announcement said the agreement had no financing condition. Dell’s SEC-filed announcement outlines the proposed financing.

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How did the offer change before closing?

On August 2, 2013, the parties amended the agreement. The cash consideration rose from $13.65 to $13.75 per eligible share, and the amended terms provided a separate $0.13 special cash dividend as well as a guaranteed $0.08 regular third-quarter dividend. The special committee described the merger consideration, counting the special dividend, as at least $13.88 per share. The regular dividend was separate from that stated amount. The August 2 announcement of revised terms records the amendment.

Stage Per-share amount What it means
Initial offer, announced February 5, 2013 $13.65 cash Original cash offer for each eligible share, according to Dell’s announcement.
Amended terms, August 2, 2013 $13.75 cash plus a separate $0.13 special dividend The revised cash consideration and special dividend; the agreement also guaranteed a $0.08 regular third-quarter dividend.
At closing, October 29, 2013 $13.75 cash The SEC filing says eligible shares converted to a right to receive this cash amount. The special dividend was provided under the amended terms.

How did shareholders evaluate the deal?

Dell said its board acted on the unanimous recommendation of a special committee of independent directors; Michael Dell was recused from the relevant board discussions and vote. The deal was subject to shareholder approval and customary closing conditions. A 45-day go-shop period allowed the company to seek alternatives.

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The special committee’s proxy materials said the go-shop drew two non-binding alternative proposals, from parties affiliated with Blackstone and Carl Icahn. In later shareholder materials, the committee said no superior offer had emerged at that point. Those descriptions came from the committee, which was advocating for the transaction, rather than an independent finding. The special committee’s shareholder materials describe its process and the proposals.

In a June 2013 proxy announcement, board lead director Alex J. Mandl said: “The Special Committee and its advisors conducted a disciplined and independent process intended to ensure the best outcome for shareholders.” The statement reflects the committee’s position in the transaction process. Dell’s proxy announcement contains the statement.

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When did the Dell buyout close?

The merger became effective on October 29, 2013. Dell’s SEC Form 8-K says eligible shares were converted into the right to receive $13.75 in cash per share, subject to the agreement’s terms. That closing amount is distinct from the approximately $24.4 billion value announced in February. Dell’s October 29, 2013 Form 8-K records the effective date and payment mechanics.

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