Dell to Go Private at $13.65

It’s official. Dell is going to be taken private. A group of investors led by Michael Dell will buy the entire firm for $13.65 per share. Interestingly, Microsoft will lend the buyout syndicate $2 billion for the deal.

Let’s look at some numbers: Dell’s IPO was on June 22, 1988 at $8.50. Since then, the stock has split 96-for-1 so that initial price works out to 8.85 cents per share. The buyout price is 154 times the IPO price. At one point in the late-1990s, shares of Dell split 2-for-1 three separate times in less than one year. At one point, Dell split 2-for-1 six times in just over 40 months.

Dell was actually not a screaming success as an IPO. The shares did indeed rally from the IPO price of $8.50 to a high of $12.50 by October 25, 1988 (or 13 cents adjusted for splits). But after that, Dell plunged to an all-time low of $4-5/8 by early 1990 (or 4.8 cents).

Then Dell put on one of the most remarkable runs in the history of capitalism. The shares skyrocketed to an all-time high close of $58.13 on March 22, 2000 ($59.69 intraday). During the decade of the 1990s, Dell advanced 890-fold which works out to 97% per year. Today’s buyout price is 77% below Dell’s high reached 13 years ago.


Posted by on February 5th, 2013 at 9:59 am

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