Dell's decision to consider spinning out its PC business was similar to rival Hewlett-Packard's 2011 announcement that it would spin out its PC business into a separate company.
However, unlike HP, which lost much investor confidence and much of its market capitalization before finally dropping plans to break itself up, Dell kept its plans a secret until Thursday's SEC filing.
The $13.65 per share price of the leveraged buyout was determined by negotiations between the special committee and venture capital firm Silver Lake Partners starting in late October. One other unnamed "financial sponsor" also made a bid at that time. The special committee asked for new bids from the two, after which that second financial sponsor dropped out while a third unnamed "financial sponsor" was invited to bid. That firm also eventually withdrew.
Eventually, Silver Lake Partners agreed on a price of $13.65 per share on the condition that Michael Dell, Dell's largest shareholder, and "related persons" would roll their shares into the deal at $13.36 per share.
To reassure investors they are getting the best possible deal in Dell's privatization plan, the special committee, assisted by Evercore Group, a New York-based independent investment banking advisory firm, set up a 45-day "go-shop" period to solicit, evaluate and potentially enter into negotiations with other companies about alternate proposals.
Should another company place a successful competing bid, it would be subject to a $180-million termination fee if it dropped out. Dell, in its SEC filing, said the fees it is paying Evercore "are structured to strongly incentivize them to obtain any superior proposal that may be available."
A stockholder meeting to vote on the final proposal is expected to be held in June or July, depending in part on the timing of the SEC review process, Dell wrote.
PUBLISHED FEB. 15, 2013