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Dell Shares Rise on Report of Buyout Plans

Fri, 02/01/2013 - 10:05am
Associated Press

NEW YORK (AP) — Shares of Dell Inc. rose 7 percent in premarket trading on new reports that the computer company is nearing a deal to sell itself to a group including its CEO, a major private equity firm and Microsoft Corp. in a deal that could mark the largest leveraged buyout since the Great Recession.

Reports of a deal in the making have been circulating for several weeks.

Citing two people familiar with the situation, Reuters reported early Friday that a deal to take Round Rock, Texas-based Dell private after 25 years as a public company could be announced as early as Monday.

Michael Dell is expected to take majority stake in the company, while Silver Lake Partners and Microsoft would become minority investors, a third person told Reuters.

Reuters said it couldn't immediately learn the per-share price of the deal, but the New York Post, also citing unnamed sources, reported late Thursday that the deal could be for between $15 and $16 per share and could be announced as early as Sunday or Monday.

The Post said that Microsoft is expected to contribute some $2 billion in capital to help fund the $24 billion deal. Both Reuters and the Post also reported that a slew of bankers, including Bank of America, have agreed to provide $15 billion in financing to help fund the deal.

In addition, Michael Dell will contribute his existing stake of almost 16 percent in the company toward gaining majority ownership, according to Reuters.

Dell didn't immediately return a message left outside of regular business hours seeking comment. The company hasn't said whether it's interested in selling. Going private, though, would enable the company to overhaul its operations without having to meet Wall Street's demands for higher quarterly earnings.

Dell, the second largest U.S. computer maker behind Hewlett-Packard Co., is one of Microsoft's biggest partners. Among other things, Microsoft licenses its Windows operating system to Dell's personal computer makers.

Like many other PC makers, Dell's revenue has been sliding as the popularity of smartphones and tablet computers divert consumer and business spending from laptop and desktop machines.

Dell shares rose 76 cents, or 5.7 percent, to $14 in premarket trading. The stock closed Thursday at $13.24, up nearly 31 percent since the start of the year, and near the midpoint of its 52-week range of $8.69 to $18.36.

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