Michael Dell-Led Consortium Offers to Take Dell Private at More Than $24 Bn
By Jerin Mathew | February 2, 2013 7:02 PM EST
A consortium led by Michael Dell is closer to inking an agreement that would see PC maker Dell Inc going private in a buyout deal, according to media reports.
Private equity firm Silver Lake Partners is joining the Dell founder and CEO in the deal that could top more than $24bn (€17.6bn, £15.3bn), say the reports.
The consortium intends to acquire Dell at $13 to $14 per share, valuing the company between $22.6bn and $24.4bn, Reuters reports.
At $14 per share, the offer price represents a significant premium to Dell's share price before buyout news, but the offer is almost certain to come below Dell's 52-week high of $18.36, the FT notes.
Meanwhile, the New York Post expects a deal at between $15 and $16 a share for the company could be announced as early as Sunday or Monday. At $15 a share, the deal would be worth $25.5bn.
Following the acquisition, Michael Dell is likely to take a majority stake and he will contribute his existing holding of almost 16 percent in the world's third-largest PC maker. Silver Lake and Microsoft, which is expected to contribute $2bn in capital to the takeover fund, would back Michael Dell as minority investors.
Investment banks Barclays, Credit Suisse, Royal Bank of Canada, and Bank of America are expected to provide debt financing for the deal, the reports say. The banks would provide some $15bn in financing, according to the NYT.
The deal, which would be the largest leveraged buyout since the global financial crisis, would allow Michael Dell to remodel the company away from public scrutiny.
As smartphones and tablets are replacing PCs, Dell has lost market share in its core PC business and is looking to rebuild itself as an enterprise software and services business, spending billions on acquisitions.
JPMorgan is advising Dell's board in the deal, but it is not expected to provide any financing for the deal.
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