PC MAKER Dell is struggling to raise the $45bn in financing it needs to complete its $67bn purchase of storage hardware maker EMC.
A report in The New York Post ,said that Dell is having difficulty completing the funding deal it needs owing to rocky global stock markets and a consequent tightening of credit.
The company is also trying to offload its Perot Systems computer services business for as much as $5bn to lighten the load, but buyers have been dropping out, also partly owing to the uncertain global financial outlook.
Atos had been a front-runner to acquire Perot, but recently dropped out of the race citing growing global economic uncertainty. Other potential buyers, according to The New York Post, include Tata Consultancy Services and NTT Data. Dell remains confident of announcing a deal for the sale of Perot "in a few weeks".
The money will come in handy whether the EMC takeover goes ahead or not. If Dell is unable to complete its financing and the purchase of EMC collapses, the cash raised from selling Perot will more or less cover the $4bn break-up fee that Dell will be obliged to pay EMC. JP Morgan is leading the group of banks working on the debt deal on Dell's behalf.
Nevertheless, Dell PR droids claimed that everything is OK, and that the deal will be closed by October. "The EMC transaction is on schedule under the original timetable and the original terms," a Dell spokesman told The New York Post.
In addition to a raising a colossal amount of finance, Dell also needs to win regulatory approval, although the firm is unlikely to be turned down on market-competition grounds.
Dell founder Michael Dell took the company private in 2013 at a cost of $24bn part-financed by private equity. In addition to using a chunk of his own personal fortune, Dell was joined by Silver Lake Management as well as a consortium of lenders. That was on top of the 16 per cent stake in Dell that he already owned.
The Dell privatisation formed one of a number of deals in the tech sector financed by private equity in recent years. Other big names to fall to the Lords of High Finance include BMC Software, Informatica, Tibco and Compuware. µ
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