Tag: Silver Lake Partners

The Wall Street Journal today is reporting that a $23 billion deal to take computer company Dell private is close to complete. The Journal cites “people familiar with the matter,” who state the deal could purchase Dell stock at $13.50 to $13.75 per share.

These price estimates fit within the range that was rumored as far back as mid-January, when it was reported that investment firm Silver Lake Partners would be the major player in the buyout. Since that time, Microsoft was also name-dropped as a potential investor in the buyout talks. Today’s journal report confirms that Silver Lake, Microsoft, and Dell founder Michael Dell are all major investors in the buyout. Dell’s 16% stake in Dell will contribute to the deal, while Microsoft is investing around $2 billion and Silver Lake will pitch in around $1 billion.

Dell, along with other PC manufacturers (such as HP), has been struggling to increase its value in the face of a changing computer industry. As consumers turn more to mobile solutions such as smartphones and tablets, PC sales have been declining. In addition, no new software has come along to spur average PC consumers to upgrade their desktop machines. Just last month a report showed that PC shipments in the fourth quarter of 2012. A privately held Dell might be able to make the type of business-wide changes that would upset investors in a public company.

Last week it was announced that Dell was participating in buyout talks that could take the company private. Silver Lake Partners and Michael Dell were both name-dropped as potential investors in the buyout.

Today, the Wall Street Journal is reporting that Microsoft may be willing to toss a few billion dollars into the deal. According to “a person familiar with the deal deliberations,” Microsoft hasn’t made a commitment yet, though it could invest “in the range of a couple of billion dollars.” According to the report, Silver Lake has been shopping for banks or other co-investors to fund the buyout.

Microsoft hasn’t commented on a possible deal, and the Journal’s unnamed source hasn’t provided any possible motivation for Microsoft’s intrest in Dell. It isn’t hard to speculate, however.

With the debut of the Surface tablet last year, Microsoft signaled a shift toward making mobile devices on its own, rather than letting OEMs decide how to best use Microsoft software. The growing integration between Windows 8 PCs, tablets, hybrid PC/tablets, and the Xbox Console demonstrated that Microsoft is serious about creating an Apple-like ecosystem for Windows 8. Dell’s development and manufacturing capabilities would be valuable resources during such a transition.

In the same vein, Dell may hold any number of valuable patents. With the number of patent lawsuits currently in courts around the world, the patent wars show no signs of abating.