Microsoft Corporation Joins The Dell LBO Saga

Microsoft Corporation Joins The Dell LBO Saga
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Microsoft Corporation Joins The Dell LBO Saga

Microsoft Corporation (NASDAQ:MSFT) is reportedly in talks to participate in a possible bid for Dell Inc. (NASDAQ:DELL). This revelation was made by CNBC’s David Faber, who according to his sources, reported that Microsoft is looking to kick in a figure in the range of $1 billion to $3 billion. In addition, Microsoft would look to take Dell private. Don’t say we didn’t tell you so!

Microsoft is holding discussions with Silver Lake Management and Michael Dell, the founder of Dell Inc. (NASDAQ:DELL). According to Faber, the Microsoft investment would be “Mezzanine”, or simply put, a debt that converts to equity if the debt isn’t repaid in a certain period of time. Going by Dell’s current situation, opting for a Mezzanine investment seems to be the only sensible play. Getting the money in place is tenably one of the biggest challenges in this deal and Microsoft, having the money it has, could help out with this. Microsoft Corporation (NASDAQ:MSFT) will reportedly receive preferred shares.

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Analysts give varied insights

At the moment, the hope of this deal materializing is exclusively based on CNBC’s information. Nevertheless, the debate has already shrouded the tech space and different analysts are giving varied insights on the possible deal.

The general perception is that Microsoft Corporation (NASDAQ:MSFT) is taking up the deal as a defensive play to keep Dell from crossing over to other platforms other than Microsoft technologies. Another flipside to the deal is the possible effect that this deal, if inked, will have on Microsoft’s vendors. As it is, most vendors were upset by Microsoft move to sell the Surface. Taking a stake in Dell, a PC vendor, could further worsen the situation.

In the past, Microsoft Corporation (NASDAQ:MSFT) has made similar moves, more notably with its bitter rival Apple Inc. (NASDAQ:AAPL). Microsoft once had a large stake in Apple when the, now formidable, iPhone maker was on its back.

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