Michael Dell coughs up $750 million cash to buy out Dell

Wed Feb 6, 2013 9:17pm EST
 
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By Edwin Chan

SAN FRANCISCO (Reuters) - Michael Dell and his investment firm are ponying up $750 million in cash toward the $24.4 billion purchase of Dell Inc to help bankroll the largest private equity-backed buyout since the financial crisis.

The Dell founder and CEO this week struck a deal to take private the company he created out of a college dorm room in 1984, partnering with private equity house Silver Lake and Microsoft Corp.

Michael Dell will contribute $500 million of his own cash, and MSDC Management - an affiliate of his investment vehicle, MSD Capital - will contribute another $250 million, according to a company filing on Wednesday.

Dell Inc also said it is targeting the repatriation of $7.4 billion of cash now parked abroad to help finance the deal. That may dismay some shareholders, as a hefty tax is usually levied on cash brought back from overseas.

The deal, which ends Dell's rocky 24-year run on the Nasdaq just as the once-dominant PC maker struggles to revive growth, is contingent on approval by a majority of shareholders -- excluding Michael Dell himself.

Several shareholders, including prominent investor Frederick "Shad" Rowe of Greenbrier Partners, have spoken out against the deal, protesting a lack of specifics as well as a potential conflict of interest with Michael Dell being the company's single largest shareholder with a roughly 16 percent stake.

"Some shareholders are glad. But there are others who feel it's a raw deal," said Shaw Wu, an analyst with Sterne Agee, who has spoken with several Dell shareholders since the announcement but declined to provide further details.

AND SO IT BEGINS   Continued...

 
A company logo of Dell is seen on the cover of its laptop at a Dell outlet in Hong Kong October October 21, 2009. REUTERS/Bobby Yip