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October 2, 2013

Dell Moves Ever Closer to Privatization

Courtesy of Dell Inc. — Dell headquarters in Round Rock. Texas.

Dell is another step closer to becoming a private company again.

The company received “all necessary pre-merger regulatory clearances for the consummation of the merger transaction in which Michael Dell, Dell’s founder, chairman and CEO, will acquire Dell in partnership with global technology investment firm Silver Lake Partners,” reads a statement on the company website.

The transaction is expected to close before the end of the third quarter of Dell’s fiscal year 2014.

Michael Dell and partner Silver Lake won their bid to take the company private after a shareholder vote Sept. 12 to accept their $24.9-billion buyout offer. The buyout translated into the pair paying $13.75 in cash for each share of Dell common stock held.

The process has not been a smooth one for Michael Dell courtesy of outspoken investor and billionaire Carl Icahn, who, along with partner Southeastern Asset Management, attempted to acquire 72 percent of Dell’s outstanding shares. Icahn promised to pay investors a special dividend if they voted for his plan over that of Michael Dell’s.

Dell’s founder, however, received a major boost when influential investment advisory firm Institutional Shareholder Services (ISS) endorsed his proposal leaving Icahn out in the cold.

The ISS issued the following statement last month:

After evaluating the risk of accepting the offer — truncation of value if the business transformation is successful — versus the risk of rejecting the offer — meaningful loss of value if the business transformation falters — ISS recommends clients vote FOR this transaction, which offers a 25.5 percent premium to the unaffected share price, provides certainty of value, and transfers the risk of the deteriorating PC business and the company’s on-going business transformation to the buyout group.

Icahn backed out of his bid to acquire the company last month.