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Michael Dell could use as much as $1 billion of his own money

Dell has seen its share of the computer market slip away, and profits are on the decline while rivals like Lenovo are growing rapidly. Dell is currently a publicly traded company, but investors and founder Michael Dell are in the process of trying to take the company private.

Bloomberg reports that Dell founder Michael Dell is seeking majority control of the company and would use up to $1 billion of his own personal funds to take his current 15.7% stake to a majority stake.

If Dell Inc. goes private and Michael Dell is able to get his ownership past 50%, he would be able to reposition the company without being subject to the scrutiny and stock fluctuations that can hinder publicly traded companies. Michael Dell's 15.7% of his namesake company is estimated to be worth $3.6 billion as of close yesterday.

By putting up $500 million to $1 billion in addition to his current shares, Michael Dell would have roughly half of the $8 billion to $9 billion equity needed to take the company private. Bloomberg reports that in addition to Michael Dell's own money and shares, Silverlake and Microsoft would each invest in the area of $1 billion to $2 billion.
 
Microsoft was initially tipped to be investing as much as $3 billion into Dell.

Source: Bloomberg


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Numbers don't add-up
By XZerg on 1/30/2013 10:41:29 AM , Rating: 2
quote:
Michael Dell's 15.7% of his namesake company is estimated to be worth $3.6 billion as of close yesterday.


I just checked Dell's market cap and it is at 23.06B with little or no change to its stock price from yesterday. In the same manner adding 500M to 1B would get him an additional 2-5% only, not enough to take 15.7% to 50%+.




RE: Numbers don't add-up
By Felthis on 1/30/2013 11:03:49 AM , Rating: 5
Right, but it's not just him.
quote:
By putting up $500 million to $1 billion in addition to his current shares, Michael Dell would have roughly half of the $8 billion to $9 billion equity needed to take the company private. Bloomberg reports that in addition to Michael Dell's own money and shares, Silverlake and Microsoft would each invest in the area of $1 billion to $2 billion.


As of right now the stock is at $13.30 with roughly 1,736,000,000 shares outstanding. He has 15.7% of them ~ 272.5 million shares. To get a majority stake they just need 34.3% more shares ~ 595,5 million shares. At the current price of $13.30 that's ~ $8 billion they need to buy that 34.3% extra stake. All the article is saying is that Michael Dell is willing to pony up .5 - 1 billion towards that $8 billion extra stake.


RE: Numbers don't add-up
By MichalT on 1/30/2013 1:03:22 PM , Rating: 2
They're not going to pay cash for the company. They're going to borrow most of it; it's called a "leveraged buyout". So any dollars you have (including the 15% that Michael Dell already owns in his company) you can multiply by a little more than two because of the borrowed money.


RE: Numbers don't add-up
By Wolfpup on 1/31/2013 4:12:43 PM , Rating: 2
FINALLY a leveraged buyout that isn't gross. What Bain Capital does is disgusting. Micheal Dell buying back his own company? Who knows how it'll go, but at least it's a non-evil use of the tactic.


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