Thursday, April 22, 2021

Report: Microsoft May Invest in Deal to Take Dell Private

Last week, reports surfaced that Dell was in talks with private equity firms about a deal that would take the company private. Now, sources close to the situation are saying that Microsoft is considering investing a lot of money in such a deal.

The Wall Street Journal’s Anupreeta Das and Shira Ovide reported, “Microsoft Corp. is in discussions about helping to finance a buyout of computer maker Dell Inc., according to a person familiar with the deal deliberations. The software company hasn’t made a commitment, but if it were to join an investor group for a Dell buyout, its investment would likely be in the range of a couple of billion dollars, this person said.”

Matt Egan with FOX Business added, “Sources told FOX Business’s Charlie Gasparino that Microsoft is exploring a potential joint venture with Dell. Microsoft is one of several potential investors in Dell. Pricing could play a key role in whether the Windows maker ultimately makes an investment in Dell, Gasparino reported. Sources have previously cautioned that talks to take Dell private have ‘seriously’ slowed down due to opposition from some shareholders worried about the pricing. Several hedge funds are also exploring taking a piece of Dell, which has been hit hard by consumers’ preference for smaller devices like smartphones and tablets over PCs.”

Reuters noted, “Private equity outfit Silver Lake Partners is trying to finalize a bidding group to take the world’s No. 3 PC maker private, and has opened discussions with potential equity partners, sources familiar with the matter have said. Dell also has formed a special committee to take a close look at any potential deal on the table, multiple sources with knowledge of the matter told Reuters. If successful, it would be one of the largest corporate buyouts since before the global financial crisis.”

Business Insider’s Jay Yarow wrote, “Microsoft is talking to Silver Lake and Michael Dell, who are working on the deal. The Microsoft investment would be ‘mezzanine,’ or some sort of preferred shares, says [CNBC’s David] Faber. Mezzanine is typically debt that converts to equity if the debt isn’t paid back in certain period of time. Faber wasn’t entirely clear on what he meant when he said it was in the form of ‘preferred’ shares. Our guess is that the Microsoft loan could convert to preferred shares at a certain point.”

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