Dell Buyout Deal Inches Closer to Fruition
January 16, 2013 9:12 AM
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Four major banks are lined up to finance the deal according to rumors
It was reported earlier this week that computer maker Dell
was in talks with private equity firms to go private
. Reports have surfaced today that those talks are now at an advanced stage with at least four major banks ready to provide financing. Rumors claim that Silver Lake Partners has lined up Credit Suisse, Bank of America Merrill Lynch, Barclays, and RBC to finance the deal.
Dell is currently worth approximately $19 billion and if this deal goes through it will reportedly be one of the largest since the global recession hit. Buyout discussions are floating a price of $13.50 to $14 per share. The equity investment from Silver Lake and other potential investors would be approximately $2 billion.
Michael Dell reportedly personally owns 244 million shares of his company.
Sanford Bernstein analyst Toni Sacconaghi said, "[The odds of a deal] are probably low, given its size and our expectation that it may require about $4 billion in equity."
"We see the rationale for a Dell (leveraged buyout) as being largely opportunistic given low valuation and interest rates, as we don't see any obvious restructuring opportunities or unique exit strategy."
Barclays analyst Ben Reitzes added, "Obviously, with Michael Dell's ownership of $3 billion and net worth of about $14.6 billion the possibility of a go-private transaction cannot be ruled out."
Dell is reportedly being advised on the possible buyout by JPMorgan.
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1/16/2013 1:09:47 PM
I think this is a good direction for them and something Bestbuy needed to do long ago. Dell can still put out quality product(I'm typing this from a new Latitude 10 tablet) they just have sooooo much bureaucracy that it can be slow to do business with them. They also suffer from the left hand not knowing what the right hand is doing.
I spent months working with them on a hardware partnership. The enterprise sales person, their tech guy and everyone up to that point was great. But when I actually send customers to them? I usually end up apologizing because the order process is so painful. They sell them things not on our hardware sheet. They sell them two of the same type of item. So, we end up with one workstation with two barcode scanners.
But hey, I'm excited for them. I hope this works out and they work out all the kinks in the current system
RE: No comments?
1/16/2013 3:58:21 PM
...for what reason do you think taking the company private will have anything to do with their bureaucracy and how generally effed up they are? There's no logical connection between those 2 issues.
RE: No comments?
1/16/2013 9:48:52 PM
I think Dell screwed up in the same space HP did: smartphones.
HP had a solid product (Veer/Pre3/Touchpad) and canned it.
Dell had a solid product (Venue\Venue Pro) and canned it.
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