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Microsoft's Involvement in Dell Buyout Getting Tricky

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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  • nebun
    dell is doomed....no matter how much money any company will invest
    Reply
  • jhansonxi
    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
    Reply
  • twztechman
    i am thinking it's $2 billion from Microsoft!
    Reply
  • leandrodafontoura
    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
    Reply
  • Soda-88
    $2 million?
    Reply
  • Thunderfox
    Implying Dell doesn't already sell Windows on the vast majority of its machines.
    Reply
  • ceh4702
    I was just reading that mr Dell wants to invest a Million of his own money also so he can run it again.
    Reply
  • ethanolson
    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
    Reply
  • freggo
    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.
    Reply
  • agnickolov
    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...
    Reply