Michael Dell gets shareholders' approval to take old firm private
Michael Dell clinched shareholders' approval yesterday for his $25bn offer to buy and take Dell private, ending months of bitter conflict with the firm's largest investors and removing uncertainty shrouding the world's No 3 PC maker.
The company plans to invest in personal computer and tablet markets, in expanding sales coverage and in growing its distribution network, founder and Chief Executive Michael Dell said in a conference call after the shareholder vote.
A "significant incremental investment" is required to turnaround the firm and having two strong private investors will aid restructuring, Dell added.
Shareholders cast their votes at a special meeting yesterday in Texas. Based on preliminary results, the buyout has secured their go-ahead and the deal is expected to close before the end of the fiscal third quarter.
The company's pace of internal transformation should now quicken. Sealing the deal should also assuage customers wary of the company's direction during a very public battle that pit major Wall Street players Icahn, Southeastern Asset Management and T Rowe Price against the chief executive.
"We still have a long way to go and many challenges to meet," Dell said. "But under a new private company structure, we will have the flexibility to accelerate our strategy and pursue both organic and inorganic investment without scrutiny, quarterly targets and other limitations of operating as a public company."
Mr Dell, who founded the firm from a college dorm-room in 1984, and partner Silver Lake fought for months to convince skeptical investors his offer was the best option. This week, he gained the upper hand after one of his staunchest opponents, activist investor Carl Icahn, bowed out of the conflict because he said it was "impossible" to win.
Michael Dell has argued that revamping his company into a provider of enterprise computing services in the mold of IBM, is a complex undertaking best performed outside the spotlight of public markets.
"Once the deal is consummated, they can move on and close some large infrastructure deals they've been working on. I do think there's been a bit of a pause," said Cross Research analyst Shannon Cross.
Dell reported a 72pc slide in quarterly earnings last month, reflecting price cuts intended to soothe nervous customers and spearhead a foray into the enterprise market.
It remains to be seen if Dell can build its storage, networking and software portfolios to vie with Hewlett Packard Co and others. Some analysts think it may be too late, as a large swathe of the corporate market has been taken by IBM and HP.
But with the PC market expected to shrink again in 2013, investors say the company has little choice.
Dell's stock was unchanged at $13.85 in afternoon trading on Nasdaq. (Reuters)