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Dell to go Private in Deal Worth $24.4 Billion (DELL)

Dell Inc. (NASDAQ: DELL) announced on Tuesday that it has reached a deal to make itself private, in a $24.4 billion leveraged buyout—the biggest buyout transaction since the financial crisis.

The deal marks an end to computer maker’s 25 years of listing as a public traded company.

According to the deal, the investment consortium led by founder Michael Dell and Silver Lake Partners will pay $13.65 a share for buying world’s third largest computer maker.

The deal represents nearly 25% premium over Dell’s average trading price in last one month before the potential buyout plan was announced on January 14.

The deal will be financed by combination of cash and equity contributed from Michelle Dell, cash contributed by investments firms associated with Silver Lake, a $2 billion loan from Microsoft Corp. (NASDAQ: MSFT) and cash from Michael Dell’s MSD Capital Investment firm while debt financing is secured from four banks, RBC Capital Markets, Credit Suisse, Bank of America Merrill Lynch and Barclays.

All involved parties are expecting the deal to close by the end of second quarter of Dell’s fiscal 2014 and the company will continue to be based in Round Rock, Texas.

The buyout agreement provides for a “go-shop” period—initially for 45 days— a period in which Dell can actively seek alternative proposals, according to the Wall Street Journal.

Following the deal, Michael Dell, who currently holds about 15% stake, will continue to remain as the Chairman and CEO.

According to the Wall Street Journal, sources familiar with the matter said that Michael Dell, who started the company in 1984 from dorm room at the University of Texas, was contemplating to make Dell private since 2012.

The Round Rock, Texas-based company, which once had a market capitalization of more than $100 billion and used to be the largest PC maker, saw its fortune eroded as sales of PCs and laptops started to dwindle in the backdrop of growing usage of tablets and smartphones.

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