Dell bows out of stock market with US$24.4b sale

SLUMPING personal computer maker Dell is bowing out of the stock market in a US$24.4 billion buyout that represents the largest deal of its kind since the Great Recession dried up the financing for such risky maneuvers.

The complex agreement announced yesterday will allow Dell Inc's management, including founder Michael Dell, to attempt a company turnaround away from the glare and financial pressures of Wall Street.

Dell stockholders will be paid US$13.65 per share to leave the company on its own. That's 25 percent more than the US$10.88 the stock was going for before word of the buyout talks trickled out last month, but a steep markdown from the shares' price of US$26 less than five years ago.

Once the sale to the group that includes investment firm Silver Lake is finalized, Dell's stock will stop trading on the Nasdaq nearly 25 years after the company raised US$30 million in an initial public offering of stock. Microsoft Corp is helping the deal along by lending US$2 billion to the buyers.

The company will solicit competing offers for 45 days.

The IPO and Dell's rapid growth through the 1990s turned its founder into one of the world's richest people. His fortune is currently estimated at about US$16 billion. Michael Dell, who owns nearly 16 percent stake in the company, will remain the CEO after the sale closes and will contribute his existing stake in Dell to the new company.

Dell's sale is the second-highest priced leveraged buyout of a technology company, trailing the US$27 billion paid for First Data Corp in 2007.

The deal is the largest leveraged buyout of any type since November 2007 when Alltel Corp sold for US$25 billion to TPG Capital and a Goldman Sachs subsidiary. Within a few months, the US economy had collapsed into the worst recession since World War II.

Leveraged buyouts refer to deals that saddle the acquired company with the debt taken on to finance the purchase.

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