Dell closer to buyout as price talks narrow: source

NEW YORK Tue Feb 5, 2013 12:33am IST

Dell computers are displayed at Best Buy in Phoenix, Arizona, February 18, 2010. REUTERS/Joshua Lott/Files

Dell computers are displayed at Best Buy in Phoenix, Arizona, February 18, 2010.

Credit: Reuters/Joshua Lott/Files

Related Topics

Stocks

   

NEW YORK (Reuters) - Dell IncDELL.O moved closer to a nearly $24 billion buyout deal, with price negotiations narrowing to $13.50 to $13.75 a share in what would be the biggest leveraged buyout since the financial crisis.

Talks between Dell, the world's No. 3 computer maker, and a consortium led by its founder and chief executive, Michael Dell, to take the company private were in the final stages on Monday, a person familiar with the matter said.

An outcome is expected soon, the person said, cautioning that no final agreement had been reached and negotiations could still break down.

Dell shares fell 2.6 percent to $13.27 in afternoon trading.

Microsoft Corp (MSFT.O), which provides its Windows software for Dell computers and is also part of the investment consortium, is expected to invest around $2 billion in the deal, while private equity firm Silver Lake is expected to put in about $1 billion, the source said.

Michael Dell is expected to roll over his roughly 16 percent stake and put in some of his own money so he has control of the company, the source added.

Dell and Silver Lake declined to comment and Microsoft did not immediately respond to a request for a comment.

The $13.50 to $13.75 per share price range being negotiated translates into an equity valuation for Dell of between $23.5 billion to $23.9 billion.

The $13.75 per share is a premium of about 23 percent to the average of $11 per share Dell traded before news of the deal talks broke and is far below the $17.61 that the shares were trading a year ago."

Dell has steadily ceded market share in PCs to nimbler rivals such as Lenovo Group (0992.HK) and is struggling to re-ignite growth. That's in spite of Michael Dell's efforts in the five years since he retook the helm of the company he founded in 1984, following a brief hiatus during which its fortunes waned rapidly.

Any deal that Michael Dell negotiates would need the approval of a majority of the shareholders. Deals that involve the considerable stake of a founder who is also the chief executive of the company are also likely to come in for extra scrutiny over whether the board exercised it fiduciary duty.

Dell has formed a special committee to take a close look at any potential deals on the table, multiple sources with knowledge of the matter told Reuters earlier.

(Reporting by Greg Roumeliotis in New York; Additional reporting by Poornima Gupta; editing by Carol Bishopric and Kenneth Barry)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 

REUTERS SHOWCASE

Wilful Negligence?

Wilful Negligence?

SEBI piles pressure on Sahara to sell overseas hotels  Full Article 

Indian Economy

Indian Economy

India's fiscal deficit in H1 almost 83 pct of full-year target.  Full Article 

M&M Earnings

M&M Earnings

M&M Q2 net profit down 4 percent, hit by poor monsoon.  Full Article 

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage