Michael Dell has pulled off a big win, taking his company Dell private in a deal valued at $24.4 billion.
The company along with help from various investors signed a definitive merger agreement on Tuesday. Michael Dell chose to partner with technology investment firm Silver Lake to acquire the firm.
Under terms of the agreement, Dell stockholders will receive $13.65 for each share of common stock. The sales price is a 25 percent premium over the company’s closing price of $10.88 on January 11.
Michael Dell will serve as the company’s chairman and CEO. Dell has invested his existing shares along with an additional investment of $700 million. Dell’s investment is enough to provide the company’s founder with a majority stake in the newly privatized tech firm.
Also investing in the new company is Microsoft. The tech giant’s $2 billion investment will provide Microsoft with approximately a five percent stake in Dell. After investing $2 billion, Microsoft said it was “committed to the long term success of the entire PC ecosystem and invests heavily in a variety of ways to build that ecosystem for the future.”
Microsoft could further benefit from the use of more than 2,400 patents currently held by Dell. The $2 billion investment could also keep Dell away from Google Android and Chrome OS devices.
Dell hopes that by going private it can begin to advance its products at a faster rate. At its peak, Dell was valued at $100 billion. Despite its slow down, Dell still brings in around $3 billion in annualized profits.
With the company going private, Dell may finally announce the Dell Ophelia, a USB sized computer that plugs into a users TV and connected to a cloud service. The Dell Ophelia will be able to connect to various OS types including Windows, Linux, and Mac systems.
Regulators much approve the deal before it can be finalized. The deal will officially close by the second quarter of Dell’s 2014 financial year.
Dell has solicited the help of third-party negotiators to avoid any concerns over Michael Dell’s involvement in the privatization deal.