Shareholders will receive $13.65 in cash for each share, valuing the company at $24.4 billion. The price is a 37% premium over three-month average share prices, and a 25% jump from closing prices on Jan. 11. That's when rumors of a possible deal emerged, pushing share prices 20% higher overnight.
The transaction relies on a complex network of financing sources, including funds from Mr. Dell's private assets, loans provided by four global banks, and a $2 billion loan from Microsoft (NASDAQ:MSFT). In a statement, Microsoft said it "is committed to the long term success of the entire PC ecosystem and invests heavily in a variety of ways to build that ecosystem for the future."
Shareholders must still approve the agreement, and the deal has to pass all the regulatory reviews of a normal merger agreement. Moreover, the board of directors will "actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals" during a 45-day "go-shop" period.
The deal is expected to close by the end of Dell's second fiscal quarter, which falls at the beginning of August this year.
Dell said that following completion of the transaction, Mr. Dell, who owns about 14% of Dell’s common shares, will continue to lead the company as chairman and CEO.