Consortium close to terms on Dell buyout
Michael Dell, Microsoft, Silver Lake in possible $24bn transaction
A buyout consortium that includes Microsoft Corp was poised on Friday to agree terms to take Dell Inc private, Reuters reported, citing insiders.
The group is led by Michael Dell, founder and chief executive of Dell and also includes private equity company Silver Lake Partners. Two of the insiders said the price per share is expected to be between $13 and $14, giving an equity valuation of $22.6bn to $24.4bn.
According to Reuters, Dell shares were up 2.5% in Friday's afternoon trading.
The deal is set to be completed tomorrow, when Michael Dell is expected to contribute his almost 16% holding to the buyout and take majority ownership, while Microsoft and Silver Lake would be minority stakeholders. The trio is said to have secured $15bn in financing spread across four lenders: Barclays, Bank of America Merrill Lynch, Credit Suisse and RBC Capital.
Reuters reported the deal would "mark the largest leveraged buyout since the global financial crisis".
Going private would allow Dell, which is trying to forge an enterprise solutions strategy, to remove public heat while it tries to mould a winning formula.
Late last month analysts told Bloomberg that Microsoft's role in the buyout is likely to irk OEM partners still recovering from Redmond's shock launch of its Surface tablet in May 2012. But at a time when global PC shipments continue to shrink, closer links with an established hardware ally may allow a more focused response to Microsoft's commercial foes Apple and Google, who continue to dominate the booming mobility space. It could also serve Microsoft to join Dell in its foray into enterprise computing.