Sources say SilverLake deal imminent, Michael Dell to take majority stake
Systems vendor Dell is looking to thrash out the final details of a deal to go private with private equity firm Silver Lake Partners, according to sources quoted in a Reuters story.
"According to two people familiar with the matter... Dell Inc is nearing an agreement to sell itself to a buyout consortium led by its founder and Chief Executive Michael Dell and private equity firm Silver Lake Partners," Reuters said.
The news agency said Michael Dell is expected to take majority ownership of the world's third-largest personal computer maker, which currently has a market value of $23bn, while Silver Lake and Microsoft would become minority investors. Michael Dell currently owns around 16% of the firm.
It's reported that Silver Lake has secured up to $15bn of debt financing to take Dell private from four investment banks - Barclays, Bank of America Merrill Lynch, Credit Suisse and RBC Capital.
Representatives for Dell, Microsoft and Barclays declined to comment.
The logic for the deal is fairly apparent. Dell has had a torrid time on the stock market as its traditional, high volume and relatively slim margin PC business has faced stiff competition from the likes of Lenovo as well as from the tablet makers including Apple, Samsung and Amazon. Going private would give it the chance to attempt to transition its business to a full systems vendor without having to cope with the volatility of its stock market listing.
Dell is now trading at around $13, but it's been as low as $8 in the last 52 weeks. It's been buoyed more recently by the talk of a buyout.
As part of its move away from reliance on PCs and PC servers, Dell has been on an acquisition spree to make it look more like an IBM, HP or Oracle. In 2009 it bought Perot systems for IT services; in 2010 Compellent for storage; in 2011 SecureWorks for security and Force10 for data centre networking. Last year it bought Wyse for thin clients, SonicWALL and Appsure for security and Quest for systems management.