Apparently computer maker Dell is in buyout talks with private equity firms reports Bloomberg. The company, which the report states has lost “almost a third of its value last year”, saw a recent increase in share price halted as rumours of a buyout surfaced.
According to people familiar with the matter, Dell is in early stage talks with at least two firms for the deal. TPG Capital and Silver Lake are high on the list of the companies interested in the buyout, which could be announced as early as this week.
Apparently several large banks have approached Dell about financing an offer, said someone with knowledge of the matter. The computer maker had a market value of US$18.9-billion as of 11 January.
“The stock has not done much, and he’s under pressure to boost numbers,” said Abhey Lamba, an analyst at Mizuho Securities USA Inc. told Bloomberg in reference to Dell CEO Michael Dell. “He wants to de-emphasize about two-thirds of his business, and that’s a hard strategy to push because it would mean overall revenue will shrink.”
This is on the first time the company has talked about “going private”. In 2010, Dell said that he had considered the move. Dell owns between 15% and 16% of the company that bears his name.
Bloomberg surmises that taking the company private could help push forward its efforts to “revive growth and cope with competition without quarter-by-quarter scrutiny from public shareholders”.
In a world where mobile devices are ruling and personal computing comes in the form of smartphones and tablets, Dell needs to not reinvent itself in a changing world but find new ways to adapt to the changes of the post-PC era.
“Dell has been making a significant shift away from the personal computer business for which it is primarily known and toward enterprise hardware, software and services. The company has been making significant acquisitions in the space, the most recent one of note being the $2.4 billion deal for Quest Software after a brief bidding war with some private equity shops,” says AllThingsD.
Since the rumours of the buyout surfaced, competitors such as Hewlett-Packard, Lexmark International and Western Digital have seen an increase in their share prices.