The future is private for Dell Inc

After vote win, CEO spells out 5- to 10-year strategy involving tablets, emerging markets

Tags: Dell CorporationMergers and acquisitionsUSA
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The future is private for Dell Inc Michael Dell says his company’s new strategy will include tablets and tapping new affluence in emerging markets. (Getty Images)
By  Stephen McBride Published  September 15, 2013

Michael Dell has won his months-long battle to secure shareholder support for a leveraged buyout of stock that will allow him to take private the company he founded from his college dorm room.

The chief executive and chairman of Dell Inc initially proposed a price of $13.65 a share, in a co-bid with Silver Lake Partners, but shareholders such as Southeastern Asset Management and billionaire Carl Icahn, fought to block the deal on the grounds that it undervalued the company.

Just six weeks prior to Thursday's deciding vote, prospects looked bleak for the Dell-Silver Lake camp as shareholders looked unlikely to vote in favour of the proposal, largely due to a large number of abstentions.

Through deal sweeteners and boardroom antics, Michael Dell managed to secure a series of vote postponements until he persuaded the board to change voting rules in two key ways. First, abstentions would not be counted as nay votes, and second, those who purchased Dell stock since the buyout had become public knowledge would be eligible to vote. Since those buyers were mainly speculators such as hedge funds, they were likely to be in favour of the deal.

Icahn mounted legal challenges to the voting changes, but was unsuccessful. Last week, in a letter to shareholders that was also filed with regulators, he announced his intention to no longer try to block the deal. He was deeply critical of the board in the letter, accusing its members of not properly serving shareholders.

But after months of corporate and legal wrangling, shareholders approved the current $24.9bn buyout offer.

Dell Inc, the world's number-three PC manufacturer by shipments, has been a publicly listed company for 25 years. In the wake of plunging bottom lines brought about by competition from tablets and changing consumer habits, its founder wanted to pursue a new strategy away from public scrutiny.

In an interview with CNBC on Friday, Michael Dell talked of his relief that the company would now be able to shift from a quarterly calendar to a "five-year, ten-year focus", which will include expanding sales capacity and tapping new affluence in emerging markets. While he suggested that tablets would be a part of this strategy, he ruled out a foray into the smartphone market.

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