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TMCNet:  Reports: CEO could put more cash into Dell buyout deal

[January 30, 2013]

Reports: CEO could put more cash into Dell buyout deal

Jan 31, 2013 (Austin American-Statesman - McClatchy-Tribune Information Services via COMTEX) -- Michael Dell appears ready to invest more of his personal wealth into the proposed buyout of Dell Inc. in order to secure majority control of the company if and when it is taken private, according to news reports.

Bloomberg news service reported Wednesday the CEO and founder of Dell Inc. could contribute from $500 million to $1 billion to the deal -- on top of his 15.7 percent ownership stake in the company's stock that already is expected to be part of the buyout.

The added investment would be to assure Dell that he would have majority ownership of the company after the deal is completed.

Reports surfaced in mid January that Michael Dell was working with Silver Lake Partners, a California investment firm, to put a buyout offer together for the company he founded in 1984 as a college freshman at the University of Texas at Austin.

It was later reported that software giant Microsoft Corp., a longtime Dell business ally, was considering joining the investment group. Microsoft is the largest software supplier to the personal computer industry.

Silver Lake also was arranging bankers that would provide up to $15 billion in debt financing to enable the takeover.

Having majority ownership would likely give Michael Dell more freedom to reshape his company in a fast-changing market for personal computers and other information technology.

Tech industry analyst Patrick Moorhead with Moor Insights & Strategy said Dell's personal investment in the project is a vote of confidence in the buyout.

"It reinforces the point of view that Michael thinks the company is worth a heck of a lot more on a private basis than on a public basis," Moorhead said. "Nothing beats having the owner put his own personal assets on the the line. If Michael is putting more money on the table, we absolutely are getting closer to a (completed) deal." Dell, the third-largest maker of PCs, reported falling profits and sliding revenue in the past year as it weathered a global slump in personal computer sales and growing competition from Asian rivals.

The Round Rock company has spent an estimated $13 billion over the past five years to acquire more than two dozen technology companies and start transforming itself into more of a one-stop-shop for advanced information technology hardware, software and services.

Dell Inc. and Microsoft Corp. declined to comment on the latest reports.

Michael Dell, who turns 48 in February, is considered to be one of the richest people in technology with a personal fortune estimated at more than $14 billion last year. About a quarter of that fortune is tied up in the company stock.

No official announcement of the buyout offer has been made, but sources close to the deal say it could happen soon.

Evercore Partners Inc. is believed to be helping a special committee of Dell's board to evaluate the proposed buyout offer and to approach other possible investors to determine their interest in making a competing offer for the company. No competing buyer has emerged so far, Bloomberg reported.

The board formed a special committee of independent directors to protect shareholders' interests in the event of a potential conflict arising from the fact that the founder, CEO and largest shareholder is a key part of the buyout group.

___ (c)2013 Austin American-Statesman, Texas Visit Austin American-Statesman, Texas at www.statesman.com Distributed by MCT Information Services

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