Dell Inc.’s marathon buyout campaign — and its 25-year run as a publicly traded company — came to an end Tuesday, when the Round Rock computer maker formally became a privately held company again.
Dell Inc. confirmed the completion of the $24.9 billion buyout by founder and CEO Michael Dell and his investment ally, Silver Lake Partners. Those two will be the principal owners of the company going forward, with Michael Dell expected to own about three-quarters of the company.
The completion of the buyout ends a 15-month struggle for Michael Dell, who told his board he wanted to pursue a buyout in August 2012. The campaign to take the company private involved resistance from major shareholders, led by billionaire investor Carl Icahn, who said the company was being bought for a bargain price. Eventually Michael Dell and Silver Lake upped their offer for the company and the board of directors changed the rules for approval. Shareholders voted to approve the deal Sept. 12.
In its 25 years as a public company, Dell Inc. expanded rapidly to become one of the largest personal computer makers in the world. The company grew into the largest private employer in Central Texas, with about 14,000 employees in the area. As it grew, Dell Inc. also became one of the most successful stocks of the 1990s, which put Austin’s tech startup community on the map and gave rise to a wave of “Dellionaires” — employees who capitalized on the stock run-up to become entrepreneurs, investors and philanthropists in Central Texas.
But Dell Inc.’s growth and profits have stalled in the past few years, as global personal computer sales have come under attack from competing products, including smartphones and tablet computers.
Now Dell Inc. is embarking on a new journey as a private firm to remake itself into a stronger supplier of advanced information technology hardware, software and services for business customers.
The new private Dell Inc. will attempt to reinvent itself and recapture the formula for business growth.
“Today Dell enters an exciting new chapter as a private enterprise,” Michael Dell said in a statement. “Our 110,000 team members worldwide are 100 percent focused on our customers and aggressively executing our long-term strategy for their benefit.”
The company has painted its new strategy with a broad brush. It involves expanding and enhancing its portfolio of advanced products, deepening the expertise of its sales force, competing aggressively in emerging markets like China, investing to expand in the PC and tablet business and creating a simplified and “enhanced customer experience.”
Analyst Rob Enderle says going private gives Dell more freedom and flexibility than any of its main rivals in the computer systems market.
“They can be more agile than anyone,” said Enderle, who is head of the Enderle Group consulting firm. “If they can use that well, they will be incredibly frightening. But it will require a different mindset and they have to do business differently than before. Old habits are hard to break.”
Analysts say the new Dell Inc. has several years to reinvent itself, recapture a business growth formula, and potentially, to re-emerge as a public company.
“They have three to five years to make it,” Enderle said. “If they don’t do it in three to five years, they may not make it.”
Under the terms of the buyout, Dell stockholders will receive $13.75 in cash for each share of company common stock that the hold. They also will receive a special 13 cent per share special cash dividend to shareholders of record at the close of business Monday.
Trading in Dell’s stock will conclude Tuesday and the company has started the process of de-listing its shares from the Nasdaq exchange.