UPDATED: Dell makes official announcement of the deal, confirms earlier reports

Dell has officially confirmed a buyout by its founder and CEO Michael Dell and private equity firm Silver Lake in a transaction valued at US$24.4bn. The company's current stockholders (other than its founder) will receive $13.65 per share in cash - a 25% premium on its share price at the market's close on 11 January.

Also involved in the transaction are Microsoft, which issued a $2bn loan, MSD Capital (a firm that manages Michael Dell's capital), Bank of America Merill Lynch, Barclays, Credit Suisse and RBC Capital Markets.

An earlier report by Bloomberg said the company board was planning to meet last night to vote on taking the company private. It also said the offers ranged between $13.50 and $13.75 per share.

Last week rumours circled as to the buyer of the shares, with Microsoft and Dell CEO Michael Dell reportedly in the race to pick up a stake in the company. Silver Lake was also named as a potential buyer.

A new-look Dell
Dell has said in the past he would like to turn its fortunes around, shifting focus from the PC division, which has not been so profitable of late, to the enterprise space where it can capitalise on the move to the Cloud.

He also wants the company to focus on software and services, an just last week in Amsterdam placed the focus heavily in this area as it invited nearly 100 press and analysts to its Technology Camp to learn about new software developments around its converged infrastructure based on acquisitions made in the recent past.

Dell traditionally has not been so heavily focussed on R&D and has been reliant on acquisitions in recent times to boost its enterprise offerings.

Ovum analyst Roy Illsley, commenting from Dell World in January this year, said Michael Dell made it clear the company was going through a transition, with Dell now segmented into four business units – services and cloud; software; servers, networking and storage; and end-user computing.

“A breakdown of current employee numbers reveals the transformation in action. Currently, 47,000 employees out of a global workforce of 100,000 are employed in Dell’s services division,” Illsley said.

“While employee numbers alone are not an indicator of a transformation (PC manufacture, unlike services, is not a labor-intense business), the statement that more than half of Dell’s gross margin now comes from enterprise solutions, software, and services was a clear indicator of change.”

“This shows that Dell is delivering on its transformation message, and the addition of the software team under ex-CA Technologies CEO John Swainson provides further evidence that Dell is moving from being a product-based company to a solutions-based company.”

It is a far cry from the company Michael Dell started 28 years ago selling upgraded PCs with “three guys and a screwdriver”. He went on create and capitalise on one of the world’s most efficient supply chain where computing equipment was built to order and one of the most successful technology companies in the world today.