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Dell talks to banks and equity firms about going private

Looks at all the angles
Mon Jan 14 2013, 23:17
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TIN BOX MAKER Dell reportedly is in talks with investment banksters and private equity vultures as it looks into going private.

Dell's rise to become the onetime top PC vendor seems like a distant memory now, since the firm is moving towards becoming a software and services business as the consumer PC market declines. The company reportedly is talking with private equity firms and several investment banks have been approached to finance a possible deal.

According to Bloomberg's sources, the talks are still in preliminary stages and could fall through if the parties cannot agree on a valuation for the firm. One of Bloomberg's sources said that because Michael Dell, founder and CEO of Dell, owns just under 16 percent of the firm, it might be easier to cobble together some sort of deal.

Although Dell's dominance in the consumer PC market has been on the wane for a number of years, the company is trying to move into the enterprise market through buying firms such as Wyse. Dell's efforts in the smartphone and tablet markets have been lacklustre at best, however the firm is still perceived to be better positioned than rival HP, which has endured a decade of serial mismanagement and almost nonstop scandals.

Goldman Sachs had previously put a buy rating on Dell's shares, claiming that its balance sheet, which includes $5bn in cash, makes it ripe for a buyout. Dell's share price has been rising on the news, meaning that the firm's value, which stands at around the $19bn mark, is going up - and with it the cost of buying back the publicly held stock. µ

 

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