Dell Inc to go private in $24.4 billion deal, Michael, Silver Lake pay $13.65 per share, Microsoft $2 bn

Feb 06 2013, 10:25 IST
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Michael Dell and Silver Lake are paying $13.65 per share in cash for world's No. 3 computer maker. (AP) Michael Dell and Silver Lake are paying $13.65 per share in cash for world's No. 3 computer maker. (AP)
SummaryMichael Dell and Silver Lake are paying $13.65 per share in cash for world's No. 3 computer maker.

with a market value of more than $100 billion.

But Dell began to falter as other PC makers were able to lower their costs. At the same time, HP and other rivals forged relationships with stores that gave them the advantage of being able to showcase their machines. By 2006, HP had supplanted Dell as the world's largest PC maker.

With its revenue slipping, Dell's market value had fallen to $19 billion before the recent leaks about the buyout negotiations.

Unlike its rival, HP apparently doesn't have any interest in going private. In a statement Tuesday, HP said it intends to court Dell customers who are worried about the company's ability to innovate, expand its product line and pay its bills now that it will have to earmark some of cash flow to reduce the debt taken on to go private.

"Dell has a very tough road ahead,'' HP said, adding that "leveraged buyouts tend to leave existing customers and innovation at the curb.''

Going private also poses other risks. For instance, it will leave Dell without publicly traded shares to entice and reward talented workers or to help buy other companies.

Microsoft also is going out on a limb with Dell.

By becoming a major Dell backer, Microsoft could gain more influence in the design of the devices running on a radically redesigned version of Windows that was released in late October. The closer ties with Dell, though, could poison Microsoft's relationship with HP, the largest PC maker, and other manufacturers that buy Windows and other software. Microsoft's recent release of its own tablet computer, called Surface, already has alienated some of the company's partners.

In a Tuesday research note, Mizuho Securities analyst Abhey Lamba predicted Microsoft's closer ties will push more PC makers to produce machines that run on Google's Chrome operating system and other software besides Windows.

Microsoft's stock gained 13 cents to $27.57 in Tuesday's afternoon trading.

Dell to go private in $24.4B deal led by founder

(Reuters) Computer maker Dell Inc will go private in a $24.4 billion deal that also involves Microsoft Corp and private equity firm Silver Lake, the parties said on Tuesday.

Company founder Michael Dell and Silver Lake are paying $13.65 per share in cash for the world's No. 3 computer maker.

The deal is being financed by cash and equity from Michael Dell, cash from Silver Lake, cash from Michael Dell's investment firm MSD Capital, a $2 billion loan from Microsoft and debt

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