Dell founder to secure majority stake in buyout using own funds

Dell founder to secure majority stake in buyout using own funds

Summary: Michael Dell is reportedly considering using his own funds to secure majority control within the Dell buyout.

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TOPICS: Dell
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Michael Dell is reportedly considering using his own money to bump up his stake within the private equity Dell buyout.

dell owner buyout own funds majority stake

Bloomberg has reported that Michael Dell owns approximately 15.7 percent of the electronics and computing firm, and may contribute equity financing by using up to $1 billion of his own personal funds.

Citing sources familiar with the matter, the publication said that Mr Dell could potentially push his ownership stake above 50 percent, which would allow the CEO to "reposition" the firm amidst fierce competition from rival companies and the gradual shift of consumer products to smartphones and tablet computing without the need for public trading.

Bloomberg estimated that Dell's stake is currently worth $3.45 billion. By boosting his equity donation, Michael Dell would be putting up over 50 percent of the total balance--whereas the rest of the buyout would be financed by debt and potentially the company's own cash flow.

It is believed that the leader of the bid, Silver Lake Partners, has brought on Credit Suisse, Bank of America Merrill Lynch, RBC, and Barclays to try to secure the deal.

Rumors suggest that it is possible Silver Lake and Microsoft will be investing between $1 and $2 billion each. The deal, in total, could be worth between $22.6 billion and $24.4 billion, pegged at between $13 and $14 per share.

According to reports, JPMorgan Chase & Co is the main party advising Dell on how to go private, but has advised a buyout price of just $19 billion. In addition, Evercore has been hired to advise a committee of the board on ways to get the highest offers on the table possible.

Topic: Dell

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5 comments
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  • He Should

    Shut down and return the money to the shareholders....
    itguy10
    • If he's taking the company private...

      ...then the shareholders are getting their money back, probably at a premium.
      John L. Ries
  • Always the maverick

    I'm pleased to see Michael bucking the trends and taking his company private.
    Muttley49
  • If Dell has the controlling shares...

    Why would a company like Microsoft want to invest in Dell? Why not just buy a PC manufacturer whole outright and gain 100% control?

    Seems like a lot of capital risk for little gain but hey, this is Microsoft so their decisions are always kinda iffy at best.
    Rann Xeroxx
  • Sensible

    If he's got the money (ie. he's not borrowing it), then he might as well buy control so he has the freedom to do what he thinks best.

    Borrowing a billion dollars, on the other hand, would be a mistake.
    John L. Ries