Report: Dell in Buyout Talks

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Unnamed sources are telling media outlets that Dell is in talks with private equity firms who would like to buy out the firm and take it private. But many experts suggest that such a deal seems unlikely.

Bloomberg’s Aaron Ricadela, Peter Burrows and Serena Saitto reported, “Dell, the third-largest personal-computer maker, is discussing a leveraged buyout with private-equity firms TPG Capital and Silver Lake, a person with knowledge of the matter said yesterday…. A deal could be announced as soon as this week, said one person, who asked not to be identified because the talks are private. Discussions also could collapse if firms fail to arrange financing or find a way to exit the investment, the people said. A buyout would require pulling together more than $20 billion in equity and debt.”

Nadia Damouni and Poornima Gupta from Reuters added, “Dell Inc is in talks with private equity firms on a potential buyout, two sources familiar with the matter told Reuters, confirming reports that sent shares in the world’s No. 3 PC maker soaring 13 percent to nearly a eight-month high. The firms are now holding discussions on a deal with billionaire Chief Executive and founder Michael Dell, who owns about 14 percent of the company, according to one source with knowledge of the matter.”

All Things D’s Arik Hesseldahl recalled, “This isn’t the first time that the ‘go private’ option has been considered at Dell. In 2010, CEO and founder Michael Dell confirmed that he had considered taking the company that bears his name private.”

The Wall Street Journal’s Steven Russolillo commented, “The fact that Dell is reportedly in buyout talks with at least two private-equity firms has quickly been dubbed by Wall Street analysts as a possible but unlikely scenario. Dell shares surged 13% to $12.29 on heavy trading volume Monday amid word that the PC maker is in talks to go private.” He quoted Shaw Wu from Sterne, Agee & Leach, who said, “Our view is that this is possible but the likelihood is low as it would take sizable financing for a company of Dell’s size with its $21 billion market cap. In addition, a deal of this size would likely involve multiple PE firms and we estimate that the majority of its businesses (70%) remain under structural and secular pressure.”