Just months after being spun off from Dell, VMware is reportedly in talks to be acquired by Broadcom.
Broadcom is a leading semiconductor firm based in the US. Its products are used in everything from home networking to smartphones to data centers. The company has increasingly been diversifying beyond the semiconductor industry, with a focus on enterprise software. According to Reuters that includes pursuing a deal to purchase VMware.
VMware helped pioneer the virtualization industry and leveraged that into becoming a cloud service provider. The company’s software helps power some of the biggest names in the business. The company was owned by Dell, before the latter spun it off in late 2021. Michael Dell maintained a 40% stake in VMware after the spin-off, potentially putting him in a position to benefit greatly from a sale to Broadcom.
According to Reuters’ sources, the negotiations are ongoing, with no deal imminent. There were also no terms of the negotiations disclosed.
VMware has completed its spin-off from Dell, becoming an independent company for the first time in 18 years.
VMware is one of the leading virtualization companies. Its software is used by some of the biggest companies in the world, and has been instrumental in the transition to the cloud. The company was bought by EMC in 2004, which was in turn bought by Dell in 2016.
In April of this year, the two companies announced that Dell would spin off VMware in a deal that was expected to top $9 billion, and help the PC maker address its outstanding debt.
The spin-off was completed Monday, with Dell receiving $9.3 billion and VMWare free to pursue new opportunities.
“By spinning off VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders,” said Michael Dell, chairman and chief executive officer, Dell Technologies. “Both companies will remain important partners, providing Dell Technologies with a differentiated advantage in how we bring solutions to customers. At the same time, Dell Technologies will continue to modernize its core infrastructure and PC businesses and embrace new opportunities through an open ecosystem to grow in hybrid and private cloud, edge and telecom.”
“VMware’s mission is to deliver the trusted software foundation that accelerates our customers’ innovation,” said Raghu Raghuram, chief executive officer, VMware. “As a standalone company, we will continue to bring our multi-cloud strategy to life by providing our customers the power to accelerate their business and control their destiny in this new era.”
Dell has announced plans to spin off VMware as a standalone company, in a deal expected to bring in $9 billion.
VMware is a leading virtualization company, with its software powering some of the most critical digital infrastructure in the world. Dell originally acquired VMware as part of its EMC acquisition in 2015.
The two companies have agreed to a spin-off for VMware, one that will provide Dell with $9.3 – $9.7 billion.
“By spinning off VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders,” said Michael Dell, chairman and chief executive officer, Dell Technologies. “Both companies will remain important partners, providing Dell Technologies with a differentiated advantage in how we bring solutions to customers. At the same time, Dell Technologies will continue to modernize its core infrastructure and PC businesses and embrace new opportunities through an open ecosystem to grow in hybrid and private cloud, edge and telecom.”
At the same time, VMware expects the spin-off to open new doors for their business.
“We will have an enhanced ability to extend our ecosystem across all cloud vendors and on-premises infrastructure vendors and a capital structure that will support growth opportunities,” said Zane Rowe, chief financial officer and interim chief executive officer, VMware. “Our strategic partnership with Dell Technologies remains a differentiator for us, and, as we execute on our multi-cloud strategy, we continue to provide customers our solutions and services on any public cloud and any infrastructure.”
Aside from those stated benefits, much of the relationship will remain unchanged, with the two companies continuing to work closely together. In fact, Michael Dell will remain chairman of the VMware board.
The deal is expected to close in the fourth quarter of 2021.
A Dell Technologies commissioned an independent survey of 4,300 worldwide business leaders indicates a massive shift toward digital transformation in 2020 accelerated by the pandemic. The survey indicates that 80% of organizations globally have fast-tracked some digital transformation programs this year. But just 41% accelerated all or most of their programs. Dell says that this is the third installment of their Digital Transformation Index (DT Index), designed to show how businesses are adapting to unprecedented uncertainty during a global pandemic.
Incredibly, 79% are reinventing their business model as a result of the disruption caused by the pandemic and 50% of international business leaders worry they didn’t transition fast enough. The study notes that digital transformation is not easy, 94% of businesses surveyed say they are facing entrenched barriers spanning across technology, people, and policy.
According to the 2020 DT Index, the following are the top-3 barriers to digital transformation success:
Data privacy and cybersecurity concerns (up from 5th place in 2016)
Lack of budget and resources (#1 in 2016, #2 in 2018)
Unable to extract insights from data and/or information overload (a jump of eight places since 2016)
“We’ve been given a glimpse of the future, and the organizations that are accelerating their digital transformation now will be poised for success in the Data Era that is unfolding before our eyes”, says Michael Dell, Chairman, and CEO, Dell Technologies.
Additionally, the survey reveals a huge shift toward remote work. About 25% of employees worked remotely before the pandemic and today it is more than 50% of all employees are remote. According to the survey, remote work has become the new normal.
Top IT Investments Are For Emerging Technologies
Prior to the pandemic, business investments were strongly focused on foundational technologies, rather than emerging technologies. The vast majority, 89 percent recognizethat as a result of disruption this year, they need a more agile/scalable IT infrastructure to allow of contingencies. The DT Index shows the top technology investments for the next one to three years:
Cybersecurity
Data management tools
5G infrastructure
Privacy software
Multi-Cloud environment
And recognizing the importance of emerging technologies, 82 percent of respondents envision increased usage of Augmented Reality to learn how to do or fix things in an instant; 85 percent foresee organizations using Artificial Intelligence and data models to predict potential disruptions, and 78 percent predict distributed ledgers – such as Blockchain – will make the gig economy fairer (by cutting out the intermediary).
Despite these findings, only 16 percent are planning to invest in Virtual/Augmented Reality, just 32 percent intend to invest in Artificial Intelligence, and a mere 15 percent plan to invest in distributed ledgers in the next one to three years.
Google announced in a blog post today that it has acquired CloudSimple, a company once central to Microsoft’s cloud ambitions.
CloudSimple is a “secure, high performance, dedicated environment in Public Clouds to run VMware workloads.” Google struck a partnership with CloudSimple in August, following a convoluted series of events.
Microsoft, in an effort to catch up with AWS, needed to bring on as many VMware customers as possible to its cloud solutions. CloudSimple was created by Guru Pangal, an entrepreneur who spent four years working for Microsoft on Azure. Microsoft and VMware had been rivals for some time. As a result, Microsoft’s plan was to use the newly created CloudSimple—also a VMware partner—as a conduit to migrate VMware workloads to Azure.
Michael Dell, CEO of the company bearing his name, stepped in to help smooth things out between the two companies, helping Microsoft secure formal permission to run VMware on Azure. As part of the deal, however, Dell-owned Virtustream became the recommended method of migrating VMware to Azure, leaving CloudSimple out in the cold.
Google saw an opportunity and formed a partnership with CloudSimple in August with the aim of helping companies migrate onsite VMware workloads to Google Cloud VMware Solution by CloudSimple.
“Through our existing partnership with CloudSimple, our customers can migrate their VMware workloads from on-premises datacenters directly into Google Cloud VMware Solution by CloudSimple, while also creating new VMware workloads as needed. Their apps can run exactly the same as they have been on-premises, but with all the benefits of the cloud, like performance, elasticity, and integration with key cloud services and technologies. And best of all, customers can do all this without having to re-architect existing VMware-based applications and workloads, which helps them operate more efficiently and reduce costs, while also allowing IT staff to maintain consistency and use their existing VMware tools, workflows and support. To that end, we believe in a multi-cloud world and will continue to provide choice for our customers to use the best technology in their journey to the cloud.”
Now that Google has acquired CloudSimple, it will be interesting to see if it can makeup lost ground against rivals Microsoft and Amazon.
“The surprise outcome ten years from now is there’ll be something much bigger than the private cloud and the public cloud,” says Dell Technologies CEO Michael Dell. “It’s the edge. I actually think there will be way more computed data on the edge in ten years than any of the derivatives of cloud that we want to talk about. That’s the ten-year prediction.”
Data Has Always Been at the Center of How the Technology Industry Works
We feel great. Our business has really grown tremendously. All the things we’ve been doing have been resonating with customers. We’ve been able to restore the origins of the entrepreneurial dream and success of the company and reintroduce innovation and risk-taking into a now $91 billion company growing at double digits last year. Certainly, the set of capabilities that we’ve been able to build organically and inorganically, with the set of alliances we have, the trust that customers have given us, we are super happy about the position that we’re in and the opportunities going forward. I think all this is really just a pregame show to what’s ahead for our industry and for the role that technology is going to play in the world.
Data has always been at the center of how the technology industry works. Now we just have a tsunami, an explosion of data. Of course, now we have this new computer science that allows us to reason over the data in real time and create much better results and outcomes. That combined with the computing power all organizations have to reimagine themselves given all these technologies. Certainly, the infrastructure requirements in terms of the network, the storage, that compute, the build-out on the edge, tons of new requirements, we’re super well-positioned to go address all that.
Predicts in 10 Years More Computed Data on the Edge Than Cloud
The surprise outcome ten years from now is there’ll be something much bigger than the private cloud and the public cloud. It’s the edge. I actually think there will be way more computed data on the edge in ten years than any of the derivatives of cloud that we want to talk about. That’s the ten-year prediction. That’s what I see. Maybe nobody’s predicting that just yet, but let’s come back in ten years and see what it looks like.
Really what we’re doing is we’re bringing to customers all the resources they need to operate in the hybrid multi-cloud world. First, you have to recognize that the workloads want to move around. To say that they’re all going to be here or there is in some sense missing the point because they’re going to move back and forth. You’ve got regulation, cost, security, performance, latency, all sorts of new requirements that are coming at you and they’re not going to just sit in one place.
This is All Super Important As We Enter This AI Enabled Age
Now with the VMware cloud foundation, we have the ability to move these workloads seamlessly across now essentially all the public clouds. We have 4,200 partners out there, infrastructure on-premise built and tuned specifically for the VMware platform and empowered also for the edge. All of this together is the Dell Technologies cloud. We have obviously great capabilities from our Dell UMC infrastructure solutions and all the great innovations at VMware coming together.
Inside the business, the first priority was to get each of the individual pieces working well. But then we saw that the real opportunity was in the seams and how we could more deeply integrate all the aspects of what we’re doing together. You saw that on stage you know in vivid form yesterday with Pat and Jeff and Satya and even more today. Of course, there’s more to do. There’s always more to do. We’re working on how we build a data platform bringing together all of our capabilities with Boomi and Data Protection and VMware. This is all going to be super important as we enter this AI enabled age of the future.
We’ve Created an Incredible Business
I think investors are increasingly understanding that we’ve created an incredible business here. Certainly, if we look at the additional coverage that we have as they’re understanding the business, some of the analysts are starting to say hey this doesn’t really feel like a conglomerate. It’s a direct quote. If you think about what we demonstrated today and yesterday and will demonstrate in the future we’re not like Berkshire Hathaway. This is not a railroad that owns a chain of restaurants. This is one integrated business that fits together incredibly well and it’s generating substantial cash flows.
I think investors over time are figuring out the value that’s intrinsic to the overall Dell Technologies family. We’ve got lots of ways to invest, we got VMware, SecureWorks, Pivotal, and of course the overall Dell Technologies.
Michael Dell Predicts in 10 Years More Computed Data on the Edge Than Cloud
“There’s this explosion of innovation that’s going on,” says VMware CEO Pat Gelsinger. “I’ve called it the four superpowers; cloud, mobility, AI, and IoT. These are just causing so many new companies, investment of capital, major new IPOs that are going on. I think with each sort of wave of these innovative cycles there’s an explosion of new companies, but then there’s also a consolidation of existing companies.”
Pat Gelsinger, CEO of VMware, and Michael Dell, founder and CEO of Dell, discuss the explosion of innovation that is going on in tech in an interview on CNBC:
There’s This Explosion of Innovation, Says VMware CEO
There’s this explosion of innovation that’s going on. I’ve called it the four superpowers; cloud, mobility, AI, and IOT. These are just causing so many new companies, investment of capital, major new IPOs that are going on. I think with each sort of wave of these innovative cycles there’s an explosion of new companies, but then there’s also a consolidation of existing companies. All of the layers start to reform. Up here you’ve got a whole new set of them emerging in many of these areas and in the existing areas there is some level of consolidation. I do believe there will be some because fundamentally at the infrastructure layer I believe customers want fewer more strategic vendors.
As I talk to CIOs I say my job is every one of your engineers is looking down the stack at infrastructure I want to enable you to have them look up to the application and business differentiating services. We’re increasingly going to automate, standardized, and cloud deliver those infrastructure layers so you don’t have to do it. We’re doing it for you in an automated AI standardized way so every one of your resources gets to look up to create business differentiating services. So yes I believe both of those will be true consolidation and explosion of innovation.
Customers Don’t Want to be Systems Integrators, Says Michael Dell
Well, certainly the combination of Dell, EMC, VMware, and Pivotal was the biggest ones (consolidations) yet to date. That was a pretty big one and last year we added more than $11 billion in revenue so that was some additional industry consolidation there for you. I think customers to Pat’s point have told us very clearly they don’t want to be systems integrators anymore. They’re looking for fewer partners. Bringing together a broad set of capabilities across the infrastructure, security, client devices, the cloud, digital transformation, enabling all those capabilities for customers. They’d much rather work with one leading company than 20 or 30 smaller ones.
There’s This Explosion of Innovation, Says VMware CEO
Looks like Richard Gere is already dating despite the fact his divorce from Carey Lowell isn’t yet finalized.
Page Sixreports the 64-year-old actor is indeed dating Top Chef host Padma Lakshmi.
“It started very recently and quietly,” a source told Us Magazine. “It’s very new. I wouldn’t even go as far as calling them a couple. They are dating. It’s the first time Padma has dated anyone since Teddy [Forstmann], and it’s something she’s been approaching very, very delicately. They just getting to know each other. They’re just having fun.”
Lowell and Gere, 64, have been married for 11 years and are parents to their 14-year-old son Homer.
Lakshmi, 43, has a daughter with Adam Dell, the brother of computer genius Michael Dell. She currently lives in New York City with 3-year-old Krishna. She was the wife of Salman Rushdie for three years before divorcing in 2007 and also dated billionaire Teddy Forstmann before he died in 2011.
Gere was previously married to Cindy Crawford for four years before the couple divorced in 1995.
Gere and Lowell, 53, who were married in 2002, parted ways in September 2013.
Gere is currently filming the movie Time Out of Mind, portraying a homeless man trying to reconnect with his daughter Maggie (Jena Malone).
Richard Gere has recently begun dating Padma Lakshmi, according to Page Six.
“They have been quietly spending some time together. It is all very new and recent, and happened while he has been filming in New York,” a source told the publication.
“It’s the first time Padma has dated anyone since Teddy [Forstmann], and it’s something she’s been approaching very, very delicately. They’re just getting to know each other. They’re just having fun,” a source told Us Weekly.
Gere, 64, is in the process of divorcing Carey Lowell, a former actress and model whom he married in 2002. They were together for seven years prior to marrying. The two have a 14-year-old son, Homer.
News of the separation broke in September 2013 and according to sources, Gere and Lowell had “been spending time apart for quite some time.”
“They have a place in Bedford [NY], and he likes it because it’s quiet and he likes the solitude,” said the source. “She likes being in North Haven in the limelight. They live next door to Jimmy Buffett and his family, and they’re good friends.”
Gere was married to supermodel Cindy Crawford from 1991 to 1995. Lowell was married twice prior to her marriage to Gere and has a 24-year-old daughter from her second marriage.
Lakshmi, 43, is known for her role as host of the Emmy Award-winning reality show Top Chef. Besides hosting the show since 2006, Lakshmi has written several cookbooks in addition to stints as a model and actress.
In 2004 she famously married the well-known and often controversial novelist Salman Rushdie. Like Lakshmi, Rushie was born in India. The two divorced three years later.
Lakshmi has a three-year-old daughter, Krishna, with ex Adam Dell, brother of computer icon Michael Dell.
Lakshmi dated billionaire Teddy Forstmann for several years until his death in November 2011 and the two were together when her daughter was born.
Gere is currently filming Time Out of Mind in New York City. He plays a homeless man who attempts to reconnect with his estranged daughter (Jena Malone.)
Earlier last month, reports leaked stating that Dell was preparing to layoff a massive amount of its workers worldwide. The Register, a British technology website, stated on January 9th that Dell would layoff 20% of its U.S.-based sales members, while also relieving 30% of its sales and marketing staff in Europe, Africa, and the Middle East. These numbers would mean that over 15,000 Dell employees would lose their job.
However, actual statements have now been released from Dell which show that the rumors wildly exaggerated the situation. Sources close to those at recode.net have divulged information which reports that around 2,000-3,000 workers will be laid off by Dell, much lower than the 15,000 figure being tossed around at the beginning of the year.
Along with this new information from insider sources come a statement from head of communication David Frink, in which he sheds some light on Dell’s decision and future plans:
“We can confirm that a small percentage of Dell’s global team members accepted the company’s offer of a significant severance package associated with a voluntary separation program. We’ve taken steps to optimize our business, streamline operations and improve our efficiency over the past few years. And, like any prudent business, we’ll continue to do so. Meanwhile, we’re hiring in strategic areas of our business, including hardware and software development, engineering and customer coverage worldwide… Reports that we have laid off as many as 15,000 are wildly inaccurate.”
The severance package which Frink mentions consists of 2 months of pay plus an extra week of pay for each year employed by Dell, along with a 75% bonus in pay, COBRA health insurance for 18 more months, and outplacement services.
The layoffs come just months after Michael Dell and an investment firm bought all of Dell’s stock shares, effectively making the company private. The move was made with the mindset that it would allow Dell to focus on long-term, enterprise solutions, following massive declines in PC sales due to the rise of tablets and mobile devices.
Dell today announced that its acquisition by Dell founder Michael Dell and investment firm Silver Lake Partners has officially completed. The transaction, which cost Dell and his partners $24.9 billion, has taken the Dell company private. Michael Dell has stated on previous occasions that the initiative should allow the company to re-focus with a longer-term strategy related to its enterprise solutions.
“Today, Dell enters an exciting new chapter as a private enterprise,” said Dell. “Our 110,000 team members worldwide are 100 percent focused on our customers and aggressively executing our long-term strategy for their benefit.”
As part of the agreement, Dell stockholders as of this past Monday will be paid $13.88 cash per share owned. Those stockholders had approved the acquisition last month at a special shareholder’s meeting. Trading in Dell stock was ended at the close of NASDAQ on Tuesday and its shares will soon be delisted.
It has been nearly nine months since the proposal was first announced early this year. At that time, Michael Dell has stated that the company needed a patience that stockholders were not prepared to give it in order to turn revenues around. The process was then delayed by billionaire investor Carl Ichan, who believed the acquisition was a severe undervaluation of the Dell company. Ichan gave up his protest in early September, paving the way for shareholders to clear the deal.
It would be an understatement to say that Michael Dell has been quite busy lately. First, it was the $25 Billion leveraged buyout of the troubled company that bears his name, in partnership with private equity firm Silver Lake.
During the marathon buyout process Michael asserted that “This is a great outcome for our customers and our company…In taking Dell private we plan to go back to our roots, focusing on the entrepreneurial spirit that made Dell one of the fastest growing and most successful companies in history.”
Now that Dell is enjoying its privacy away from the glare of stock market and feeling its roots again, Michael’s second act was to fully focus on the rebirth of Dell as a solutions company for small, medium and large scale enterprises while gradually discarding its old avatar as a products company. Dell had briefly alluded to this impending transformation in an interview released earlier in April 2012. http://www.youtube.com/watch?v=Lygzd1w1sj4
But it was really at Oracle’s OpenWorld conference in San Francisco this past week, where he gave the attendees and tech-world a bird’s eye view of his long term vision for Dell Inc.
“Our success won’t be measured just by short-term results but also by our ability to help our customers succeed five, ten and 20 years from now…We need to be looking not just at the quarter ahead, but at the decade ahead and investing to create value for customers as long-term relationships with a long-term vision…We are totally focused on transitioning our customers to more agile, more affordable, powerful solutions to help drive their organizations,” insisted Dell.
And it is Asia and Africa with rapidly exploding populations where Dell has set his sights to sell his “more agile, more affordable” solutions. In an in-depth interview with AllThingsD, Dell spelt out his plan for the emerging markets.
“We’re also really active in emerging markets. We’ve been active in all the obvious ones. But we’re also really active in the outer reaches of the emerging market. We have a billion-dollar business in Africa that is growing rapidly. We’re also active in southern Asia. We’re expanding …into countries like Ghana and Kazakhstan, and Ivory Coast and Croatia and Nigeria. All these countries have governments and telcos, financial and energy companies, all of which need serious mission-critical IT. Half our business today is outside the U.S,” said Dell.
Dell, which has consistently been one of the biggest and most influential contractors for the mammoth US Federal government even as its global market-share was rapidly eroding, will now aggressively lobby African and Asian governments to purchase technology solutions from Dell-Oracle partnership to boost growth and profits.
Will this strategy succeed? Since Africa is producing 40 million births/year, 10 times that of North American births, and Asia is producing 74 million births/year, 10-times that of European births, growth will come from Asia and Africa, not Europe and North America, which are rapidly aging and dying. This means Michael Dell, if he plays his cards right this time around, will enjoy phenomenal success. And we wish him well.
Dell today announced that its shareholders have approved the proposed buyout of the PC manufacturing company by the company’s founder and CEO, Michael Dell (pictured). The vote was taken today at a special shareholders meeting. The $24.9 billion transaction will see Michael Dell take control of the company along with investment firm Silver Lake Partners.
The buyout was first proposed back in January, with an estimated $24.4 billion offer. For months now, the Dell board has been battling the criticisms of billionaire investor Carl Ichan, who claimed the entire deal was severely undervaluing the company. With Icahn bowing out of the situation earlier this week, the final terms of the deal have ended up very close to what was initially proposed. Shareholders will come away with $13.75 per share, as well as a cash dividend of $0.13 per share. Quarterly dividends of $0.08 per share for the third quarter 2013 are also guaranteed for stockholders prior to the deal closing.
When the proposal was first announced, Michael Dell stated that he intends to take Dell private so that it can have more time to execute a long-term strategy of shifting its business toward enterprise solutions. Today he reiterated that he intends to turn Dell into an enterprise solutions and services business.
“I am pleased with this outcome and am energized to continue building Dell into the industry’s leading provider of scalable, end-to-end technology solutions,” said Michael Dell. “As a private enterprise, with a strong private-equity partner, we’ll serve our customers with a single-minded purpose and drive the innovations that will help them achieve their goals.
“As our company continues to expand its enterprise solutions and services business, our team members will be Dell’s most valuable asset and the key to our future success.”
(Image courtesy mikeandryan via Wikimedia Commons)
Billionaire activist investor Carl Icahn penned an open letter on Monday to Dell Inc. shareholders announcing the end of his battle with the company’s Board of Directors. Some reports indicate Icahn will leave the deal about $11 million richer and will refocus efforts on Apple.
In the letter, Icahn accused Michael Dell—who can now regain control of the company—and Silver Lake Management of undervaluing Dell Inc.: “because: 1. Dell is paying a price approximately 70% below its ten-year high of $42.38; and 2. The bid freezes stockholders out of any possibility of realizing Dell’s great potential.”
Dell is so far silent on Icahn’s withdrawal but this frees up the anticipated Thursday vote on taking the company private. Michael Dell and Silver Lake’s offer is $24.9 billion. This is the fourth attempt at a vote, which has been repeatedly postponed. Michael Dell and Silver Lake raised their offer in August by $0.10 a share to $13.75 to entice investors. They further agreed to pay a special $0.13-per-share dividend by the deal’s closing date, assuming it succeeds. That is on top of the stock’s regular $0.08 dividend.
Language in the letter compares the Dell board to a dictatorship, invokes Clark Gable’s infamous, “I don’t give a damn,” in reference to the Board and makes veiled accusations of stretching Delaware law.
Icahn ended the letter by promoting his Twitter feed, “If you are incensed by the actions of the Dell Board as much as I am, I hope you will choose to follow me on Twitter where from time to time I give my investment insights.”
Icahn is apparently enamored of his Twitter account. His profile blurb lists him as: “Chairman of Icahn Enterprises L.P.; etc., etc. Some people get rich studying artificial intelligence. Me, I make money studying natural stupidity.”
Twitter is great. I like it almost as much as I like Dell.
Dell finally announced its privatization deal today. The company is being acquired by founder Michael Dell and investment firm Silver Lake.
Dell stockholders will receive $13.65 per share in cash in a transaction valued at about $24.4 billion. The transaction represents a premium of 25% over Dell’s closing share price of $10.88 on Jan. 11, 2013, the last trading day before rumors of a possible going-private transaction were first published, as well as a premium of about 35% over Dell’s enterprise value as of that day, and implies a 37% premium over the average closing share price during the previous 90 days ending January 11.
Michael Dell said, “I believe this transaction will open an exciting new chapter for Dell, our customers and team members. We can deliver immediate value to stockholders, while we continue the execution of our long-term strategy and focus on delivering best-in-class solutions to our customers as a private enterprise.”
“Dell has made solid progress executing this strategy over the past four years, but we recognize that it will still take more time, investment and patience, and I believe our efforts will be better supported by partnering with Silver Lake in our shared vision,” he adds. “I am committed to this journey and I have put a substantial amount of my own capital at risk together with Silver Lake, a world-class investor with an outstanding reputation. We are committed to delivering an unmatched customer experience and excited to pursue the path ahead.”
“Michael Dell is a true visionary and one of the preeminent leaders of the global technology industry,” said Egon Durban, a Silver Lake Managing Partner. “Silver Lake is looking forward to partnering with him, the talented management team at Dell and the investor group to innovate, invest in long-term growth initiatives and accelerate the company’s transformation strategy to become an integrated and diversified global IT solutions provider.”
Michael Dell will continue as Chairman and CEO. The transaction is subject to regulatory approval.
Update: Microsoft has released the following statement:
“Microsoft has provided a $2 billion loan to the group that has proposed to take Dell private. Microsoft is 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.
“We’re in an industry that is constantly evolving. As always, we will continue to look for opportunities to support partners who are committed to innovating and driving business for their devices and services built on the Microsoft platform.”
Dell may be looking to go private, as the company has been participating in buyout talks with Silver Lake Partners, according to a report from the Wall Street Journal.
The publication, citing a person familiar with the matter, reports that discussions took place on Tuesday for “a leveraged buyout at around $13 to $14 a share,” and that the buyout group would include Silver Lake in addition to at least one other investor “such as a pension or sovereign wealth fund, and Mr. Dell.”
The source reportedly also said that the group would need to arrange $2 billion in equity, and Michael Dell would “likely put his stock toward the deal” (worth at least $3.6 billion). “The group would also use some cash on Dell’s balance sheet, while taking on new debt of about $15 billion, to meet an equity purchase price of roughly $22 billion to $25 billion,” says the report. “The person said advisers are trying to bring the negotiations to a close quickly, either way.”
According to Fortune, TPG Capital was also in talks with Dell, but has walked away from the talks (but was working independently). That report cites multiple sources.
Dell shares are trading at $12.58 (-0.59, -4.47%) at the time of this writing.
