Michael Dell closes in on Dell takeover – with the help of private equity

By Graeme Burton
03 Feb 2013 View Comments
Michael Dell sitting

Michael Dell will launch his private-equity-backed plan to take Dell, the company he started in 1984, private as early as next week.

The founder and CEO of the PC vendor is expected to offer $24bn (£15.3bn) or more with the backing of private-equity firm Silver Lake Partners, according to a report on the Reuters newswire, which claims sources involved with, or close to, the deal.

Further reading

The buyout consortium will offer between $13 (£8.28) and $14 (£8.91) per share, according to the report, valuing Dell at between $22.6bn (£14.4bn) and $24.4bn (£15.54bn). Dell's shares, though, are currently trading at around the $13.50 (£8.60) mark, and shareholders may demand a bigger premium on this price.

If the bid is accepted, Michael Dell will take majority ownership of the company he founded, which is based in Round Rock, Texas, while Silver Lake and software giant Microsoft would become minority investors. Dell already owns 16 per cent of the company and, together with his part in the leveraged buy-out

Such a deal involving Microsoft, though, would almost certainly mean the end of Dell's flirtation with energy-efficient, ARM-based servers as they only run distributions of the open source operating system Linux.

The debt finance for the deal will come from Barclays, Bank of America Merrill Lynch, Credit Suisse and RBC Capital, part of the Royal Bank of Canada, according to Reuters' sources.

The deal would be the largest leveraged buyout since the global financial crisis, according to Reuters - although whether that is a good thing or not is open to question.

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