Founder seeking majority control to take Dell private
Published 01/02/2013 | 05:00
DELL founder Michael Dell is seeking majority control of the company as he tries to take the computing giant private.
Mr Dell is now expected to spend about $1bn (€750m) of his personal fortune on the leveraged buyout (LBO) which, combined with his current 15.7pc stake in the company, would put him in a position to hold a controlling interest in the business.
By contributing his stake, worth about $3.6bn at yesterday's close, and another $1bn, Mr Dell would be putting up more than half of the total $8bn to $9bn equity check, with the remainder of the takeover financed by debt and possibly some of Dell's own cash reserves.
The private equity firm Silver Lake, which is leading the LBO, and Microsoft would invest $1bn to $2bn each.
If Dell, who is currently chief executive of the firm, was to
take control of the business, it would give him the scope to reposition it as a software services provider, rather than the pure computer manufacturer it is known as currently.
At the moment, the company is watching its core PC business fall into what analysts claim is a structural decline, as users switch their attention to tablet PCs or wait longer to upgrade their computers.
Silver Lake and its partners have lined up about $15bn in funds for the buyout. The deal would likely value Dell at about $23bn to $24bn. Dell and Silver Lake have been in talks about a deal that would take the company private at or a little below $14 a share.
Shares in Dell slipped 0.2pc in New York. The company has a market capitalisation of about $23bn, down 21pc in the past year.
JPMorgan Chase is the main bank advising Dell on its talks to go private. (Additional reporting by Bloomberg)