Talks between Dell and a consortium led by its founder and chief executive Michael Dell to take the world’s No.3 PC maker private were still on track on Monday, with negotiations focusing on a price of between $13.50 and $13.75 per share, a person familiar with the matter said. This makes the total value of the deal almost $24 million.
If the transaction goes ahead it will be the largest leveraged takeover since the onset of the banking crisis in 2007, worth around $20bn (£12.7bn). Microsoft is expected to invest about $2bn in the deal, while the private equity firm Silver Lake – which has previously invested in Skype – is expected to put in about $1bn, the source said.
The prospect of Microsoft — which is a long-time Dell partner — holding sway over a major hardware player continues to raise eyebrows. Cozying up with one supplier — say Dell, over others such as HP, Lenovo, Acer etc…. could obviously cause problems. But Microsoft appears to be losing leverage over its traditional PC partners, most of which could be counted on to pre-load Windows on virtually all of their laptops and desktops.
As a sign of changing times, HP on Monday announced its first Chromebook, a laptop that ships with Google’s Chrome OS, not Windows. Whether that is a reaction to all this Dell-Microsoft talk or was just an inevitable hedging of bets is unclear.
Michael Dell is expected to roll over his roughly 16% stake and put in some of his own cash for control of the emerging private company.
He intends to convert the business from a computer company to a business which provides a range of information technology services. The PC market is in sharp decline, and at present PCs account for 70% of Dell’s earnings and more than half of its profits.
[Wall Street Journal]
