In 1984, 19-year-old
Michael Dell founded PC's Limited
in his dorm room with a startup budget of a mere $1,000.
The company quickly exploded and, shortly after taking its
current name, went public in 1988. It has been owned by
stockholders around the world ever since, but those days appear
to be near an end.
According to Reuters
, Dell (NASDAQ:
) is near an agreement to be sold to a consortium of buyers. The
leader of the group is none other than Michael Dell, who would
claim majority ownership under the deal.
Meanwhile, Microsoft (NASDAQ:
) and Silver Lake Partners would become minority investors,
according to Reuters
The finishing touches are set to be added over the weekend and
the transaction could be announced as early as Monday, as notes
Reuters. It would be the largest leveraged buyout since the
global financial crisis.
According to Reuters, the final price of the deal is not yet
clear. However, the buyout group has secured up to $15 billion in
debt financing from Bank of America Merrill Lynch, Barclays,
Credit Suisse and RBC Capital as notes Reuters.
Dell is currently worth approximately $24 billion.
More Privacy = More Profitability?
A January article by Bloomberg
indicated the move could help Dell "Accelerate efforts to revive
growth and cope with competition without quarter-by-quarter
scrutiny from public shareholders."
Reuters echoes this belief, stating "Going private would 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."
In other words, Dell wouldn't have to explain its every move
to the investing public if it goes private. The company would
have more control over its own operations if this occurs.
Best for Shareholders and Michael Dell?
Reuters notes that Dell has formed a special committee of
independent directors and hired Evercore Partners to assess
whether or not the deal is in the best interest of shareholders,
not just Michael Dell.
Opening the Gates
While their specific stake is unclear, Microsoft's inclusion
would give Bill Gates a significant interest in Dell. Gates is
the founder, chairman and
of the software giant. He currently owns around 5 percent of
Thus, while Gates wouldn't be pulling the strings at the Round
Rock, Texas computer firm, he'd effectively own part of the
After hovering in the low $13 range since late-January, Dell
has risen closer to $14 as of this writing. The stock is up
around four percent on Friday.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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