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Is Dell on the Market?

While Dell hasn't publicly confirmed that it's considering leveraged buyout proposals from private equity firms, Wall Street continues to buzz at the prospect that indeed the computer giant is on the market and a deal could surface in the not-to-distant future.

Two bidders apparently in the mix include TPG Capital and Silver Lake, with Bank of America Merrill Lynch, Barclays, Credit Suisse and the Royal Bank of Canada in the pipeline to provide financing. First reported by Bloomberg on Monday, CEO Michael Dell is not surprisingly a key player in any such deal -- he holds an estimated 16 percent stake valued at about $3.6 billion in the company he founded in his dorm room back in 1984.

The company's stock rose 21 percent as of the close of business yesterday before tapering off more than 4 percent this afternoon. Once valued at more than $100 billion during the dotcom boom, a deal today would be valued at approximately $20 billion, ironically in the ballpark of the amount Hewlett Packard paid for Compaq a decade ago.

Both Dell and HP continue to struggle in the PC market as Asian rivals gain momentum -- most notably Lenovo, which gained prominence after acquiring IBM's PC business in 2004, but also by Acer and Asus.

Like HP, Dell is looking to further extend its footprint into the enterprise, as evidenced by numerous acquisitions in recent years such as SonicWall, EqualLogic, Compellent, Perot Systems, KACE Networks, Ocarina Networks, Force 10, Boomi, Wyse, AppAssure and most recently its push into enterprise software capped by the recent $2.4 billion acquisition of Quest Software.

The question is, would a privately held Dell have the resources to make the acquisitions the company needs in order to continue its push to build upon its enterprise hardware, software and services portfolio? Is a spinoff or outright sale of its PC business in the cards?

What's your view on the potential impact of Dell going private? Drop me a line at [email protected].

Posted by Jeffrey Schwartz on 01/16/2013 at 1:14 PM


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