Dell founder to seek majority control using own funds

NEW YORK: Michael Dell is seeking majority control of Dell in a buyout that would combine his 15.7 per cent stake in the company with as much as $1 billion of his personal funds, said people familiar with the matter. Michael Dell may contribute equity financing of $500 million to $1 billion, said the people, who asked not to be identified because the talks are private.

Dell, the PC maker he founded in 1984, is nearing a buyout led by Silver Lake Management and Microsoft may provide part of the funding, people familiar with the situation have said. Going private and pushing his ownership stake past 50 per cent will enable CEO Dell to reposition the company amid shrinking PC sales and an industry-wide shift to mobile and cloud computing without the scrutiny and stock fluctuations that come with being publicly traded.

By contributing his stake, worth about $3.6 billion at Tuesday’s close, and another $500 million to $1 billion, Michael Dell would be putting up more than half of the total $8 billion to $9 billion equity check, with the remainder of the takeover financed by debt and possibly some of the $11 billion of cash Dell reported it had as of September 30. Silver Lake and Microsoft would invest $1 billion to $2 billion each.

EXPLORING OPTIONS

Michael Dell, the special committee of the company’s board and their advisers are finalising details of the equity financing while making sure they have explored all possible alternative options, including a sale to other buyers, said two of the people familiar with the situation. Given the potential for conflicts in a deal where Michael Dell helps take his company private, financial advisers and Dell’s board are being extra cautious.

Evercore Partners, which is advising the special committee of the board, has approached other potential buyers and no alternative bids have emerged so far, said one of the people.

Dell and its advisers have also explored the possibility of a dividend recapitalisation, which would involve taking on debt to help pay for a special dividend, as a way to increase shareholders’ value, said another person. Dana Gorman, a spokesman for Evercore at Abernathy MacGregor Group, declined to comment.