Dell buyout pegged at $13-14 a share: reports

Dell buyout pegged at $13-14 a share: reports

Summary: Once the world's largest PC maker by shipments, Dell is looking to go private, according to numerous reports. But, for how much exactly?

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Reports today suggest that Dell may be planning to go private for between $13 and $14 a share, according to sources speaking to The Wall Street Journal with knowledge of the matter. 

It comes as news broke on Tuesday that Dell was planning to leave the stock market and go private.

Throw some math into the mix. With 1.74 billion shares at $13 or $14 a share, the company could be worth any where between $22.6 billion and $24.4 billion. The ceiling price would be $14 a share, according to CNBC.

It's understood that buyout firm Silver Lake Partners, which is leading the bid, brought on board Credit Suisse, Bank of America Merrill Lynch, RBC and Barclays in a bid to finance the deal. Meanwhile, J.P. Morgan is advising Dell on a buyout of just $19 billion -- well under the lower $13 a share estimate. 

It is believed that such a deal in the region of the mid-$20 billion range would be one of, if not the largest deal to take a company private since the global recession.

Dell's share price rocketed on the news. The company's shares were halted on the Nasdaq on Monday after a 10 percent jump in price triggered a circuit breaker.

Dell is now trading down by around 5 percent in early to mid-morning trading on the relatively low price estimate.

Screen Shot 2013-01-16 at 10.23.30
$DELL down 5 percent at one point at 10:25 a.m. ET on January 16. Image: Google Finance

According to the Journal, because chief executive Michael Dell owns more than 15 percent of the company, a buyout could get complicated, due to conflicts of interests. To wit:

Previous buyouts involving management have raised eyebrows because of the potential for conflicts of interests. Executives who join a buyout group have an interest in keeping the purchase price from rising too much, which could put them at odds with their duty to get the best value for shareholders.

It's perhaps strange to think that considering we're very much past the worst of the global financial crisis -- the so-called "credit crunch" -- and while many startups and major technology firms alike -- including Facebook -- went public last year amid difficult economic times, some are pulling out of the public trading exchange and going private again.

We reached out to Dell for comment, but a spokesperson continued its "doesn't comment on rumor or speculation" rhetoric.

Topic: Dell

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  • Any company...

    ...that has been in the clutches of Wall Street these days has to question whether it's worth it to be public.

    Wall Street, ever since the booms of the late 90's and mid 2000's, has demanded a high growth (often seemingly demanding 10% a year or more even during crashes) from public companies otherwise they are ignored/shunned and then there's much misery to be had.

    I can't blame them for wanting to go private if they can, as Wall Street has gotten far too greedy to tolerate the much slower and steadier growth cycle that is a hallmark of a more stable and safer market.
    Zorched
    • Re: Any company...

      You think Microsoft would be better off as a private company?
      ldo17