Dell Buyout Deal Could Strike This Monday, Say Sources

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The recent rumors of a buyout deal in the works for Dell have been reaching a fever pitch as of late and the newest reports from two individuals "familiar with the matter" suggest that a deal to buy out Dell may be closer in the making than previously expected.

The latest reports suggest that the buyout deal, in which Dell sells itself to a buyout consortium comprised of Silver Lake Partners, a private equity firm, and Dell Founder and Chief Executive Michael Dell, is sufficiently close to fruition that the final terms of same could be announced as early as this Monday. While the exact terms haven't been reached yet, the reports indicate that the new majority shareholder would be Dell himself, who would contribute its current stake of approximately 16 percent to gaining majority ownership, while Silver Lake and Microsoft would take minority shareholder stakes in the firm.

While the exact price to be paid is unknown, the reports suggest that this deal would represent the largest leveraged buyout since the global financial crisis began. The investment group has fully $15 billion in debt financing behind it to allow it to affect its move to take Dell from the clutches of four investment banks including Bank of America Merrill Lynch, RBC Capital, Barclays and Credit Suisse, which would make the company private. Meanwhile, Dell in its current form has engaged its independent directors and Evercore Partners Inc. to evaluate the terms of the deal and ensure a good fit overall for all shareholders. And Silver Lake is getting advice from Barclays and Perella Weinberg Partners on how to handle the transaction, while JPMorgan Chase & Co. is offering likewise advice to Michael Dell.

Why the sudden rush to go private? Dell has been working to change its posture for some time now, moving from a company that dealt primarily in PCs for consumers to use to being a full-service shop for all things computer, especially as it relates to the corporate trade. There are significant advantages to such a move and major opportunities as the consumer market weakens due to the move to mobile devices. But a publicly held company would receive a lot of scrutiny if it made such a move, and profits would likely take a hit in the interim. A privately held company, meanwhile, can make this transition without that kind of observation.

Only time will tell if the deal actually goes off as some expect it to, but Dell has what will likely prove to be the right idea about expanding its market into more corporate fields as well as its current offerings for consumers. Dell has a lot of great products, and it would be a shame to see them go. But without a healthy appreciation for market realities, the good products would still go unavailable. Ultimately. Dell has to make the moves necessary to keep the company afloat and offering more for the business sector is likely to prove an excellent step forward indeed.




Edited by Jamie Epstein
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Contributing TechZone360 Writer

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