Michael Dell Using Own Money to Take Control of Company

Bloomberg reports that Dell CEO Michael Dell is looking to gain a majority control of the company he founded in 1984 by combining his 15.7 percent stake, which is worth a meaty $3.6 billion USD, with up to $1 billion of his own personal funds in equity financing. So far Microsoft is still on board to provide part of the funding in a buyout headed by Silver Lake Management.

Unnamed sources said that Michael Dell's personal investment will push his ownership stake of Dell well past 50-percent. This will enable him to reposition the company as PC sales shrink due to an industry shift over to cloud and mobile-based computing. The company is looking to go private, eliminating the "scrutiny" and stock fluctuations associated with public trading, so that the company can focus on reinventing itself.

Bloomberg reports that between his current stake and up to $1 billion in personal funds, Michael Dell would be putting up more than half of the total $8 billion to $9 billion equity check for going private. The remainder of the takeover would be financed by debt and maybe even some of the $11 billion in cash the company said it had back in September 2012. Silver Lake and Microsoft are expected to invest between $1 billion and $2 billion each.

Unnamed sources close to the situation said that Michael Dell, the special committee formed by the company's board, and their financial advisers, Evercore Partners Inc., are finalizing the details of the equity financing. They're also making sure they have explored all avenues including selling the company to other buyers, and a possible dividend recapitalization. The committee and financial advisers are also reportedly being extra cautious due to Michael Dell's possible financial involvement to make his company private.

Silver Lake and its partners have reportedly stockpiled around $15 billion in funds for a buyout of Dell if the CEO chooses not to make a personal investment. The company's value would hover around $23 billion to $24 billion thanks to the deal. By going private, stocks will likely be worth $14 a share or less, sources said.

 

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  • "15.7 percent stake, which is worth a meaty $3.6 billion USD,"

    So a Billion will get him another approx 5% for a total of about 20%
    How does that 'control' the company ?

    Just curious how the math works.
    12
  • Other Comments
  • "15.7 percent stake, which is worth a meaty $3.6 billion USD,"

    So a Billion will get him another approx 5% for a total of about 20%
    How does that 'control' the company ?

    Just curious how the math works.
    12
  • 20% IS a huge share, my friend.
    Most shareholders have less than that, summing up to 100%
    Usually the boards are made of the top % owners.
    3
  • freggo"15.7 percent stake, which is worth a meaty $3.6 billion USD,"So a Billion will get him another approx 5% for a total of about 20%How does that 'control' the company ?Just curious how the math works.

    Read the article thoroughly.
    Quote"Bloomberg reports that between his current stake and up to $1 billion in personal funds, Michael Dell would be putting up more than half of the total $8 billion to $9 billion equity check for going private. The remainder of the takeover would be financed by debt and maybe even some of the $11 billion in cash the company said it had back in September 2012. Silver Lake and Microsoft are expected to invest between $1 billion and $2 billion each."
    8