Jan. 15--Back in 2010, Michael Dell acknowledged that he had considered taking his
company, Dell Inc., private, but he declined to say much about it.
When he was asked at an investment conference whether he had considered that sort of move for his company, Dell said simply "Yes."
When Bernstein Research analyst Toni Sacconaghi pressed for a further explanation, the CEO said simply "No comment."
Dell Inc. officially still has no comment on the subject.
But numerous reports from the financial media this week said Dell Inc. is discussing a potential leveraged buyout, one that, if it happens, could be the largest U.S. corporate buyout in five years.
The Wall Street Journal on Tuesday said Dell is working with two investment first TPG Capital -- formerly known as Texas Pacific Group -- and Silver Lake Partners, both of which have taken other tech companies private. Interestingly, Kevin Rollins, Dell's former CEO, is a senior adviser to TPG.
While some financial analysts and industry experts said the size of such a deal -- which probably would be more than $20 billion -- would make it difficult to pull off, other analysts said Tuesday that the deal makes sense because interest rates are near historic lows, because Dell's stock price is devalued and because Michael Dell owns nearly 16 percent of the company's stock and is determined to turn it around.
Michael Dell, at age 47, is one of the nation's richest tech executives. But only about a quarter of his estimated total wealth of more than $14 billion is tied up in his company's stock. He owns nearly 16 percent of the company's stock, an amount that was worth about $3.5 billion at the market's close Tuesday.
The real motivation for Dell, analysts say, is to remake and strengthen the company he founded 29 years ago when he was a freshman at the University of Texas at Austin.
"This will be his monument to forever," said analyst Rob Enderle with the Enderle Group. "Michael is at an age where you realize that mortality is real and you start thinking long-term. He really wants his company to outlast him."
Analysts said any buyout deal for Dell Inc., the world's third-largest personal computer maker, could take at least a month to put together and could be a challenge to finance despite prevailing low interest rates.
It would be the biggest buyout of a company since the financial crisis of 2008 brought such deals to a screeching halt. Analysts say a Dell buyout deal could be valued at more than $20 billion.
"Now is the time to do it," Enderle said. "A large portion of this is going to be debt financed. If you are going to do it, you are going to do it when interest rates are incredibly low.
Taking the company private would give Dell the freedom to make bigger moves to restructure the company without worrying about push back from stock analysts and stock investors.
"It allows you to operate more strategically," Enderle said. "You can make big gambles. And he doesn't have to sweat the financial analysts pummeling him every quarter for any move that he makes.
"He would be pulling the company off the track and putting it into the shop and making the changes it needs so he can take it out and race it again."
The first news of a potential buyout broke Monday afternoon, causing a 13
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