Wednesday 26 November 2014

Four banks lined up to finance deal that will take Dell private

Nadia Damouni and Poornima Gupta

Published 17/01/2013 | 05:00

TALKS to take Dell private are at an advanced stage with at least four major banks lined up to provide financing, two sources told Reuters, propelling shares of the number-three computer maker 7pc higher.

Buyout firm Silver Lake Partners, which is leading the deal, tapped Credit Suisse, Bank of America Merrill Lynch, Barclays and RBC late last year to finance a potential deal, the sources said on condition of anonymity, because details have not been made public.

JPMorgan is advising Dell on a potential buyout of the $19bn (€14.2bn) company, which would be one of the largest deals since the global recession.

It will also allow Dell, which has been trying to become a one-stop shop for corporate technology needs as the PC market shrinks, to conduct that difficult makeover away from public scrutiny.

Silver Lake is working with one of its major investors, known as limited partners, the sources said. Its involvement was earlier reported by the 'Wall Street Journal'.

The sources cautioned that a deal could come soon but that the situation was still fluid.

Discussions

Silver Lake Partners was in discussions with Dell for a buyout at around $13.50 to $14 a share, with an equity investment from Silver Lake and other potential investors of roughly $2bn, CNBC reported.

Dell, Bank of America, RBC, Barclays and Credit Suisse declined to comment. JP Morgan and Silver Lake did not immediately return calls seeking comment.

Dell, which has been in talks with private equity firms on a potential buyout, has had on and off discussions with the firms but talks heated up late last year, they said.

A deal involves equity investment from billionaire CEO Michael Dell, who owns 14pc of the firm, and is America's 22nd richest person according to Forbes.

Mr Dell now owns 244 million shares in the company, according to Thomson Reuters data, and has a fortune of $14.6bn.

Dell's stock closed up 7.2 percent at $13.17 on Nasdaq.

News of a potential deal caught many industry participants by surprise, many of whom find it difficult to understand the investment thesis of the private equity investors behind such a move. (Reuters)

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