Newspaper article International Herald Tribune

Momentum Builds for Big Dell Buyout

Newspaper article International Herald Tribune

Momentum Builds for Big Dell Buyout

Article excerpt

A potential takeover led by private equity, at more than $20 billion, would be one of the biggest of its kind since the financial crisis.

Dell is advancing toward a goal many had thought all but unattainable after the financial crisis: a leveraged buyout worth more than $20 billion.

The computer maker is in talks with investment firms and its founder, Michael S. Dell, about a deal that would take it off the public markets, people briefed on the matter said Tuesday.

One potential transaction that appears to be gaining steam is one that would be led by Silver Lake, a private equity firm that focuses on technology deals, one of the people said. The firm has already tasked a number of banks -- Bank of America Merrill Lynch, Barclays, Credit Suisse and Royal Bank of Canada -- with lining up the enormous amount of financing that would be needed, perhaps as much as $16 billion.

Silver Lake is also sounding out potential partners that could contribute equity financing for the deal, a group that might include wealthy Asian investors, the person said.

Dell is contemplating using some of its enormous store of cash, totaling about $11.3 billion as of Nov. 2, to help defray the deal's cost. More than 80 percent of its cash is held overseas, and bringing it home could generate a big tax penalty.

Mr. Dell is expected to contribute his stake of about 16 percent in the company to the deal, helping to lower the ultimate price. As of the market close Tuesday, his shares were worth about $3.6 billion. It is unclear whether he would invest additional money as part of a buyout.

Nonetheless, the talks appear to have momentum, though one of the people briefed on the matter cautioned that they could still fall apart.

Representatives for Dell, Silver Lake and the banks declined to comment.

Should a deal come together, it would be the most radical step yet to revive a company that was once so profitable that it gave rise to a class of "Dellionaires" during the Internet boom.

Mr. Dell, who founded the computer maker in his dormitory room in 1984, has long cast about for a solution to a world where revenue from personal computer sales has consistently fallen in recent years.

Behind any move to take Dell private is the hope that freed from the tough scrutiny of public shareholders, the company can continue moving into the more lucrative and stable market of providing hardware and software services for companies.

The company's stock had fallen nearly 48 percent in the five years through last Friday, the day before Bloomberg News reported Dell's talks with private equity firms. Since then, the stock has jumped 21 percent.

A leveraged buyout of Dell would be one of the biggest private equity transactions since Blackstone Group acquired Hilton Hotels, more than five years ago, for more than $25 billion. …

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