Dell Founder to Take Control of Company With $1bn Investment
By Alistair Charlton | January 30, 2013 11:30 PM EST
Speaking anonymously to Bloomberg, the people "familiar with the matter" said Dell, who currently has a 15.7 percent stake in the company he founded in 1984, may contribute equity financing of between $500m and $1bn (£317m and £634m), which, when combined with funding from others, would give him more than 50 percent of the company and overall control of it.
With this stake, Dell could reposition the company without the need to answer to investors, or worry about fluctuations in the share price, as the company would become private.
Dell would combine his $3.6bn stake in the company with a further $500m to $1bn of personal wealth, and the remainder of the takeover would be from debt financing, some of the $11bn in cash the company reported to have in November, and investment from Silver Lake Management and Microsoft.
The report comes days after Dell sources claimed that the company was close to securing a buyout with Silver Lake, and Microsoft is believed to be contributing part of the funding, possibly as much as $2bn.
If the buyout goes ahead, then it would be the largest of a technology company since 2006.
As PC sales fall amid an industry-wide shift to mobile and cloud computing, Michael Dell may be considering restructuring to bring Dell into line with its rivals, or move away from the consumer market entirely, and instead focus on its newer data centre business.
In July 2012, Dell purchased Quest Software, a company which makes software for data centres, in a deal worth $2.7bn.
Dell's market value has fallen 21 percent to $23bn in the past year, as competition from Asian rivals saw its share of the PC market fall to 10.2 percent by the end of 2012, putting the company behind Lenovo and HP, and less than one percent ahead of Acer in fourth, according to research by Gartner.
It was reported earlier this month that Silver Lake and its partners have lined up $15bn in funds for a buyout of Dell and the deal would value the company at between $23bn and $24bn - such a takeover would take the company private at around $14 per share, above the current public price of $13.25.
Dell's share price has risen from $10.87 a couple of weeks ago, to $13.25 at the time of publication, suggesting a potential buyout is attractive to investors.
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