Dell unveils private equity buyout worth $24.4 bn

The move, which would delist the company from stock markets, could ease some pressure on Dell, which is cash-rich but has seen profits slump, as it tries to reduce dependence on the slumping market for personal computers.

Dell unveiled plans to go private Tuesday in a $24.4 billion deal, giving founder Michael Dell a chance to reshape the former number one PC maker away from the spotlight of Wall Street.

"I believe this transaction will open an exciting new chapter for Dell, our customers and team members," Michael Dell said in unveiling the deal with equity investment firm Silver Lake, backed by a $2 billion loan from Microsoft.

The company said it had signed "a definitive" agreement to give shareholders $13.65 per share in cash -- a premium of 25 percent over Dell's closing share price on January 11, before reports of the deal circulated.

The move, which would delist the company from stock markets, could ease some pressure on Dell, which is cash-rich but has seen profits slump, as it tries to reduce dependence on the slumping market for personal computers.

The plan is subject to several conditions, including a vote of unaffiliated stockholders.

It calls for a "go shop" period to allow shareholders to seek a better offer.

The company founder said Dell has made progress in its turnaround strategy "but we recognize that it will still take more time, investment and patience, and I believe our efforts will be better supported by partnering with Silver Lake in our shared vision."

"I am committed to this journey and I have put a substantial amount of my own capital at risk together with Silver Lake," he added.

Under terms of the deal, Michael Dell, who currently owns some 14 percent of Dell's common shares, would remain chairman and chief executive and boost his stake with "a substantial additional cash investment," a company statement said.

Additional cash for the deal will come from Silver Lake, a major tech investment group, and MSD Capital, a fund created to manage Michael Dell's investments.

The plan also calls for a $2 billion loan from Microsoft, rollover of existing debt, and financing committed by Bank of America-Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets.

Credit ratings agency Standard & Poor's worried about Dell racking up debt in the transaction, warning it could cost the company its investment-grade credit rating.

S&P said it was putting Dell, which currently has an A- rating, on CreditWatch with negative implications. The ratings agency is thus weighing a downgrade of Dell's corporate credit.

And S&P rival Moody's lowered Dell's rating two notches, from A2 to Baa1.

"Moody's expects that conclusion of the review will likely result in a multi-notch rating downgrade of the long term rating to below investment grade given the proposed transaction's planned use of debt and Dell's continuing business challenges," it added.