|By Maureen O'Gara||
|January 16, 2013 07:30 AM EST||
Depending on who you listen to, Dell, once the world’s largest PC vendor fallen on hard times, could have a deal to go private through a leveraged management buy-out in place in the next six weeks (The Wall Street Journal) or in the next week or two (CNBC).
On the other hand, Toni Sacconaghi, the ace Sanford Bernstein analyst, thinks the whole exercise will come to naught because of the sheer size of the ~$22 billion-$25 billion deal, one of the biggest LBOs of all time.
The Dell presence on the show floor at recent Cloud Expos has been huge
Besides the size of the deal, he says, “you have a pretty risky environment in the sense that the PC marketplace is going through a lot of change right now.”
The last word out of CNBC Tuesday was that Dell could be taken out for $13.50-$14 a share, not the premium that most of the Street seems to be anticipating. The Wall Street Journal waded in later agreeing.
Silver Lake Partners is apparently the key private equity house Dell has been negotiating with for the last two or three months. The other name that has come up is TPG Capital.
The two might team to buy $2 billion in equity in Dell. Sacconaghi think it would take $4 billion.
There’s reportedly no formalized bidding group yet. A sovereign wealth or pension fund could get involved. The Wall Street Journal says JP Morgan Chase is managing “the deal process” apparently as an advisor.
According to CNBC the $15 billion debt financing is oversubscribed. Reuters says at least four major banks have been lined up by Silver Lake: Credit Suisse, Bank of America Merrill Lynch, Barclays and the Royal Bank of Canada.
Because of Michael Dell’s nearly 16% ownership position in the firm, worth maybe $3.6 billion, he’s assumed to be in. Because of that conflict of interest stockholders have no guarantee of getting the best price. He may be kicking in additional financing perhaps from his multibillion-dollar personal investment fund.