Dell Founder May Use Personal Funds To Control PC Maker After Buyout

Updated on

Dell Inc. (NASDAQ:DELL) founder, Michael Dell, may seek majority control of the PC manufacturing firm after the buyout. Bloomberg reports that Dell could combine up to $1 billion from his personal coffers with his already existing 15.7 percent stake at the company, citing well-placed sources. The sources also mentioned Microsoft Corporation (NASDAQ:MSFT)’s involvement in the deal, remarking that the tech big wig may provide part of the funding needed to push through with the buyout.

Dell Founder May Use Personal Funds To Control PC Maker After Buyout

Dell, who founded the company in 1984, may kick in about $500 million to $1 billion. Adding his personal funds to his 15.7 percent stake, which is roughly valued at $3.6 billion, will push his ownership stake above the 50 percent mark. In doing so, Michael Dell will be able to actively reposition the company amid slackening PC sales and the industry’s undisguised slant toward cloud computing and mobile.

The sealing of the deal will see Dell Inc. (NASDAQ:DELL) go private. This means that Michael Dell will be able to control the company without interference from the ever-increasing headwinds that characterize today’s stock market.

Owing to the fact that the deal will push Dell under the veil of privacy, Michael Dell, alongside his board, is proceeding very cautiously. The sources, who opened up to Bloomberg, say that Dell, several advisors and a special committee of the company’s board are making sure to explore all the available alternatives. The sources also add that the team is winding up on details of the equity financing.

Barclays’ crystal ball was right about privatization

In mid-January, after the first mention of Dell’s buyout prospects, Barclays PLC (LON:BARC) (NYSE:BCS) published a report which advanced the idea that Michael Dell would push forward with privatization. So far, many notable developments have taken place and it is now almost certain that Dell Inc. (NASDAQ:DELL) will go private. Despite the fact that this move presents prospects for the PC maker, Barclays contends that there are some major challenges for the PC maker. Firstly, acquiring smaller enterprise firms will be an uphill task and as such, diversifying away from PC will be difficult. In addition, the weakness in PC sales may yield low revenue streams, affecting the company’s ability to support the debt

Leave a Comment

Signup to ValueWalk!

Get the latest posts on what's happening in the hedge fund and investing world sent straight to your inbox! 
This is information you won't get anywhere else!