Microsoft may invest up to $3 billion in Dell to help to company go private.
CNBC's David Faber reports that Microsoft may make an investment in Dell to help the latter company go private. Unnamed sources claim that Microsoft may invest between $1 billion to $3 billion USD, and is currently in talks with Silver Lake, the main sponsor behind the leveraged buyout, and Michael Dell who are currently working on the deal to go private.
Faber said that Microsoft's investment would be "mezzanine" financing, or rather debt that converts into equity if the debt isn't paid back within a specific timeframe. Faber also mentioned preferred shares which means the loan could convert into preferred shares of Dell at a certain point.
He also gave an update regarding the talks between Michael Dell, Silver Lake and the special committee formed by Dell shareholders, reporting that talks continue and a deal could be made by the end of the week. Pricing is still an issue, and last week reports claimed that the potential window was between $13 and $14 per share.
Faber points out that Microsoft has a lot at stake, as Dell is one of its biggest customers. Thus, it's not surprising that Microsoft would want to help its Windows partner so that the relationship continues to prosper. Dell of course is not only one of Microsoft's largest clients in the consumer division, but the enterprise sector as well – the latter probably more so than the former.
But Dell is looking to reinvent itself by going private. If Microsoft becomes a potential investor, then the Redmond company may have some influence over Dell's business which in turn could hamper Dell's ability to seek out a new business model. On the Microsoft front, it may face a serious backlash from its other Windows partners including the very vocal Acer, Asus, HP and others if it does indeed invest in Dell
David Faber's report on CNBC can be seen in full here.