Dell to Go Private in $24.4 Billion Deal

Poornima Gupta, Reuters:

The deal is being financed by cash and equity from Michael Dell, cash from Silver Lake, cash from Michael Dell’s MSD Capital investment firm, a $2 billion loan from Microsoft Corp and debt financing from Bank of America Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets.

It’s far too easy to reference Michael Dell’s infamous 1997 quote about what he’d do if he were in charge of Apple. But that was a different Apple; on the other hand, Dell has barely changed since then.

Microsoft’s $2 billion contribution is particularly interesting. Mary Jo Foley is suspicious of its chances of a successful return:

Microsoft does not own part of Dell as part of this transaction. However, the situation reminds me of another major Microsoft “investment”: The billions it paid to Nokia almost exactly two years ago to help rescue a company teetering on the edge of a “burning platform.”

At the time of the February 2011 Nokia deal, Microsoft wanted and needed at least one of its partners to be “all in” with the Windows Phone platform, to the exclusion of competing operating systems like Android.

Steven Davidoff of the Times’ Dealbook doesn’t like the management-led buyout at all:

The first issue is price. In such a buyout, a company’s executives have an incentive to pay the lowest price possible, yet they are also supposed to represent the interests of shareholders. That’s a fundamental conflict.