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Microsoft's Involvement in Dell Buyout Getting Tricky

By - Source: Tom's Hardware US | B 19 comments

Microsoft has reached a "sticking point" in the leveraged buyout negotiations with Dell.

Ars Technica reports that Microsoft's role in Dell's leveraged buyout has reached a "sticking point" in negotiations. The company reportedly wants more than just an investment in return for the $2 billion it's sinking into the buyout deal. The Redmond company also wants a say in how the company will be run.

"Under one scenario being discussed, Dell would agree to use Microsoft's Windows software to power the vast majority of its devices," one source said.

Dell is already one of Microsoft's biggest Windows-based clients, but the Redmond company may be looking to prevent Dell from making a "radical" reorganization, or to prevent Dell from departing from the PC market. The problem is that Dell reportedly wants to go private so that it can break away from depending on PC sales, and to alter the way it conducts its business.

News of Microsoft's interest in Dell surfaced last week. Unnamed sources told CNBC's David Faber that Microsoft was 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 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.

Even last week, it was obvious that Microsoft's involvement could hamper Dell's intent to "reinvent" itself by going private. But despite Microsoft's "sticking point", the deal between Michael Dell, Silver Lake and the special committee formed by Dell shareholders is supposedly on track. A formal announcement is expected to be made within the next few days.

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  • 4 Hide
    nebun , January 31, 2013 12:12 AM
    dell is doomed....no matter how much money any company will invest
  • 1 Hide
    jhansonxi , January 31, 2013 12:32 AM
    I wonder how the other OEMs will react to a Dell deal. Rumor is they aren't happy with the Win8 sales so far:
    http://winsupersite.com/windows-8/windows-8-sales-well-below-projections-plenty-blame-go-around
  • 1 Hide
    twztechman , January 31, 2013 12:34 AM
    i am thinking it's $2 billion from Microsoft!
  • 1 Hide
    leandrodafontoura , January 31, 2013 12:50 AM
    Its funny, Dell once said Apple should close their doors and quit business. It doesnt matter if you like or hate Apple, the company is still laughin
  • 0 Hide
    Soda-88 , January 31, 2013 12:50 AM
    $2 million?
  • 0 Hide
    Thunderfox , January 31, 2013 12:56 AM
    Implying Dell doesn't already sell Windows on the vast majority of its machines.
  • 0 Hide
    ceh4702 , January 31, 2013 1:33 AM
    I was just reading that mr Dell wants to invest a Million of his own money also so he can run it again.
  • 0 Hide
    ethanolson , January 31, 2013 1:41 AM
    Over at HP, we're heavily selling our Win7 or Win8 downgraded to Win7 at the factory with great success. If Microsoft pushes Win8 PC's like mad through Dell, then more business will flow our way.

    Win7 = VHS
    Win8 = BetaMax
  • 4 Hide
    freggo , January 31, 2013 2:13 AM
    ethanolsonOver at HP, we're heavily selling our Win7 or Win8 downgraded to Win7 at the factory with great success. If Microsoft pushes Win8 PC's like mad through Dell, then more business will flow our way.Win7 = VHSWin8 = BetaMax


    Not sure where you are aiming with the video comparison but technically BetaMax was better than VHS; not sure if you can say that Win 8 is better than Win 7.
  • 3 Hide
    agnickolov , January 31, 2013 2:59 AM
    freggoNot sure where you are aiming with the video comparison but technically BetaMax was better than VHS; not sure if you can say that Win 8 is better than Win 7.

    Actually, yes - you can say that on the technical level. Windows 8 is more lightweight, easier on resources, more nimble. All of that amounts to nothing for consumers though due to the terrible UI choices...
  • 0 Hide
    LORD_ORION , January 31, 2013 3:12 AM
    Sooo.... walled garden like Apple is what they want.
  • 2 Hide
    digiex , January 31, 2013 3:45 AM
    Control-Alt-Dell
  • 2 Hide
    darkavenger123 , January 31, 2013 4:46 AM
    ethanolsonOver at HP, we're heavily selling our Win7 or Win8 downgraded to Win7 at the factory with great success. If Microsoft pushes Win8 PC's like mad through Dell, then more business will flow our way.Win7 = VHSWin8 = BetaMax

    Correction:

    Win 7=Blu Ray
    Win 8=HD-DVD

    :p 
  • 0 Hide
    Murissokah , January 31, 2013 11:51 AM
    So Dell wants to shift go private and shift focus away from PC sales... with an investment from Microsoft? And they didn't think that maybe, just maybe, they had their own agenda?
  • 0 Hide
    p05esto , January 31, 2013 11:53 AM
    Dell makes some of the very best web servers, their DRAC cards are amazing. In our datacenter 80% of all the servers are Dell. Have you tried the Dell Precision workstation? They are a beast and with the 17" IPS screens they are all we run here as well. I have no problems with Dell's high end offerings and their service has always been great in my experience (business customers).
  • -1 Hide
    ubercake , January 31, 2013 12:43 PM
    I guess it makes sense. If MS is paying the bills, shouldn't they have some say? It can't hurt at this point.
  • 0 Hide
    susyque747 , January 31, 2013 1:11 PM
    Goodbye Dell
  • 0 Hide
    Anonymous , January 31, 2013 1:42 PM
    Dell hath sold his soul to the dark loard beezelballm, and will live in damnation in a sea of fire and bimodal confusion for eternity! And the mark of the beast 888 shall forever be embossed on his forehead!
  • 0 Hide
    g00fysmiley , February 1, 2013 11:49 AM
    ethanolsonOver at HP, we're heavily selling our Win7 or Win8 downgraded to Win7 at the factory with great success. If Microsoft pushes Win8 PC's like mad through Dell, then more business will flow our way.Win7 = VHSWin8 = BetaMax


    but beta max was better than vhs... windows 8 really isn't