Report: Michael Dell to Spend $1 Billion to Retain Control of Dell

Unnamed sources tell Bloomberg that Michael Dell could invest up to $1 billion of his own money in the deal to take Dell Inc. private. That would give the company founder more than 50 percent ownership of the firm that bears his name.

Bloomberg’s David Carey, Serena Saitto and Jodi Xu reported, “Michael Dell is seeking majority control of Dell Inc. (DELL) in a buyout that would combine his 15.7 percent stake in the company with as much as $1 billion of his personal funds, said people familiar with the matter. Michael Dell may contribute equity financing of $500 million to $1 billion, said the people, who asked not to be identified because the talks are private.”

Jeffrey Burt with eWeek added, “Reports have been circulating in the past few weeks that Dell executives are considering a leveraged buyout that would take the company private and give it greater flexibility as it moves forward with its transformation. Some of the names circulated as key players in the plan to take Dell private are not only equity firms like Silver Lake Management, but also software giant Microsoft, which could invest as much as $1 billion or more in the deal.”

TechSpot’s Shawn Knight noted, “Reports surfaced claiming Redmond could be prepared to pump between $1 billion and $3 billion into the deal but as the Wall Street Journal is now reporting, Microsoft’s role in the new company has been a bit of a road block in the negotiations. That’s because Microsoft allegedly wants to have some say in Dell’s daily operations rather than just being a financial backer.”

ZDNet’s Charlie Osborne observed, “Bloomberg estimated that Dell’s stake is currently worth $3.45 billion. By boosting his equity donation, Michael Dell would be putting up over 50 percent of the total balance–whereas the rest of the buyout would be financed by debt and potentially the company’s own cash flow.”