Personal computer maker Dell Inc. (DELL: Quote) is reportedly moving close to a deal to be acquired by a consortium led by its founder Michael Dell, and private equity firm Silver Lake Partners, according to media reports over the weekend.
The buyout group is reportedly discussing a deal to take Dell private for $13 to $14 a share, valuing the company at between $22.6 billion and $24.4 billion. The deal would likely be the largest leveraged buyout since the global financial crisis.
According to reports, investors who would own Dell include Michael Dell, who owns nearly 16 percent of the the company's shares, while Microsoft Corp. (MSFT: Quote) and Silver Lake Partners will be minority stakeholders. Michael Dell is likely to take majority ownership of the company.
It is expected that Microsoft, which has more than $66 billion in cash on hand, would contribute roughly $2 billion in the deal. If successful, Microsoft would not reportedly involve in day-to-day operations at Dell, but Dell would agree to use Microsoft's Windows software to power the vast majority of its devices.
Four investment banks are reportedly lined up to raise about $15 billion in debt to help fund the deal. The banks are said to be Barclays plc (BCS, BARC.L), Bank of America Merrill Lynch (BAC), Credit Suisse Group AG (CS) and RBC Capital (RY, RY.TO).
Texas-based Dell is currently the world's third largest PC maker. It had lost the global PC lead to Hewlett-Packard Co. (HPQ: Quote) in 2006 and lost the second position to China's Lenovo Group Ltd (LNVGY) in the third quarter of 2011. According to Gartner, Lenovo overtook HP as the world's top PC vendor in the third quarter of 2012.
Dell is struggling with lower sales for desktops and laptops as consumers switch over to devices such as the iPad and iPhone from Apple Inc. (AAPL) and Android-based handsets. According to IDC, sales of PCs over the holidays slid for the first time in more than five years, and Dell's shipments of computers in the fourth quarter slid 21 percent.
Taking the company private is likely to allow Dell to focus on hardware, software and services for businesses, without bothering about keeping up quarterly earnings during the process.
DELL closed Friday's trading at $13.63, up $0.39 or 2.95 percent on a volume of 57.53 million shares.
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by RTT Staff Writer
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