Dell closes in on buyout deal
It looks like the proposed Dell LBO is close to becoming a reality.
Reuters reports that negotiations have bubbled forth a price range of between $13.50 and $13.75 a share, which would value the computer maker at nearly $24 billion. Talks between Dell's founder Michael Dell and his private equity backers and the board are said to be in the final stages. Microsoft 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 consortium backing the deal apparently has some other investors lined up.
As for Michael Dell himself, he is "expected to roll over his roughly 16 percent stake in the company and add personal funds in order to retain control of the company."
At some point, shareholders will have to approve the deal. It would not appear at this point that a richer deal would be forthcoming, but you never know. Obviously, Dell's debt would take a big hit. This deal is so huge, in fact, that it will have enormous implications for the entire corporate bond market. If the market is convinced that the Dell deal validates the LBO concept all over again, the debt of companies that are seen as ripe for buyouts will likewise be hit hard. Some portfolio managers are already adjusting.
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