Just 24 hours ago, we heard about Dell’s alleged plans to go private and now both WSJ and Reuters are reporting that talks are now in advanced stages with private equity firms lining up banks for financing.
According to Reuters, private equity firm Silver Lake Partners is leading the discussions and has even brought Credit Suisse, Bank of America Merrill Lynch, Barclays and RBC in to finance a potential deal. One of major issues with taking Dell private is going to be financing and if Silver Lake is able to do that will the help of these bank, we might actually see the this PC maker going private.
Wall Street Journal adds that Silver Lake is discussion a buyout at around $13-$14 per share, which is about the current share price of Dell. The buyout group is likely to include a private equity firm, another investor and Michael Dell.
WSJ claims that Silver Lake and the other investors would need to arrange for $2 billion in equity, and Michael Dell would likely put his stock toward the deal, worth $3.6 billion or more depending on the offer price, this person said. The group would also use some cash on Dell’s balance sheet, while taking on new debt of about $15 billion, to meet an equity purchase price of roughly $22 billion to $25 billion. The person said advisers are trying to bring the negotiations to a close quickly, either way.
JP Morgan is reportedly advising Dell for this deal. Dell or any of the so-called involved banks have not commented on the buy-out reports.
While, there are complications with a massive buyout like this, it would also allow Dell to re-align its businesses with more focus on enterprise software and services (more lucrative market than PC) without having to worry around investor concerns.