The Dell buyout saga continues as the latest report indicates that the agreement is set to be finalized over the weekend, and an announcement made on Monday. Michael Dell is expected to take majority ownership of the struggling company using a personal investment while Silver Lake and Microsoft will become minority investors.
Dell, the third-largest personal computer maker, has a market value of $23 billion. Currently it's unknown what the trio will eventually pay Dell shareholders in order to go private, but the deal will reportedly be marked as one of the largest leveraged buyouts since the global financial crisis. The buyout consortium is still ironing out the last-minute details, so it's possible the timetable could slip.
According to unnamed sources close to the transaction, Silver Lake has secured up to $15 billion of dept financing from four investment banks including Barclays, Bank of America Merrill Lynch, Credit Suisse and RBC Capital. Barclays and Perella Weinberg Partners are reportedly advising Silver Lake on the transaction while JPMorgan Chase & Co is advising Dell.
Previous reports stated that Michael Dell will invest up to $1 billion of his personal funds in addition to contributing his existing stake of 15.7-percent which is worth $3.6 billion. Silver Lake and Microsoft are expected to invest between $1 billion and $2 billion each, thus the remainder of the $24 billion takeover will be funded by Silver Lake's string of banks previously mentioned.
By going private, Dell will will be able to transform itself from a struggling consumer desktop maker to a "one-stop shop for corporate technology needs" without the approval of publicly-held stock owners. But Dell is still looking out for those who invested in the company by hiring Evercore Partners and forming a special committee of its independent directors. These two entities will make sure shareholders are getting the best deal, and that the transaction isn't focused on what's best for Michael Dell.
The New York Post reports that the final buyout deal could be set between $15 and $16 a share. Among the negotiations currently being hammered out is how much of a breakup fee should be demanded in case a rival bidder emerges. The buyout team reportedly doesn't want to "appear to impede a possible rival offer by asking for too high a break-up fee."
Sources said that while no other bidders have emerged, that could drastically change once the specifics of the deal are revealed on Sunday or Monday. Dell reportedly went public with its stock in June 1988 to raise more capital, for financial transparency, and to attract more people. Going public also made it easier for the company to find workers.
