Shares of Dell (Nasdaq: DELL) climbed in premarket trading Tuesday on reports the personal computer maker is nearing a deal to go private worth between $23 billion and $24 billion.
The transaction is said to involve a group including Microsoft Corp., private equity firm Silver Lake and CEO and company founder Michael Dell.
The Wall Street Journal, citing people familiar with the matter, says the price being discussed is between $13.50 and $13.75 per share. This would be better than the $11 per share the stock was hovering at before word of the buyout talks trickled out last month, but a steep markdown from the shares’ price of $26 less than five years ago.
Dell’s stock closed at $13.27 on Monday.
Bloomberg reported that Dell’s board was to meet on Monday night to vote on an offer to take the company private.
The deal may be announced early this morning in the U.S., said the people, who asked not to be identified because the process is private. .
Silver Lake Management LLC will invest more than $1 billion in the buyout and Microsoft Corp. will invest about $2 billion, one of the people said.
Chief Executive Officer Michael Dell will contribute his 15.7 percent stake, valued at more than $3.6 billion, and contribute $700 million, this person said, giving him a majority stake in the company.
In addition to the equity and about $15 billion in debt, the deal will include billions of dollars in cash from Dell including some from offshore accounts, said one of these people.
Dell is taking the PC maker private after a quarter century as a publicly traded company after struggling to keep pace with competitors such as Apple Inc. in mobile electronics. It has also been slow to come to terms with the shift in business demand toward cloud computing, where storage and software are delivered at low cost over the Internet.
David Frink, a spokesman for Dell, and Frank Shaw, a spokesman for Microsoft, declined to comment. A representative for Silver Lake declined to comment.
The transaction would be the largest technology leveraged buyout since the financial crisis, according to data compiled by Bloomberg. Going private may help the third-largest PC maker speed up attempts to revive growth and compete more effectively without the scrutiny of public investors.
The biggest technology LBO on record was KKR & Co.’s purchase of payment processor First Data Corp. for more than $25 billion in 2007. A deal for Dell would probably be the largest purchase of a computer maker since at least 2002, when Hewlett- Packard Co. bought Compaq Computer Corp. for about $19 billion.
There were $412.7 billion in private-equity deals last year, a 20 percent decline from 2011 and the smallest amount since the depths of the financial crisis. Other technology companies, including disk-drive maker Seagate Technology Plc, have tried to go private and had the talks fall through over valuations or difficulty in financing deals.
