Dell Share Price Rises on Buyout Rumor

Posted by at 2:20 pm on January 14, 2013

michael-dellShares of Dell rose more than 12 percent early Monday afternoon after Bloomberg News reported that the personal computer maker was in talks with at least two private equity firms about going private.

A buyout of Dell would be worth more than $17 billion, based on its total enterprise value. The company has some $9 billion in debt, but $11 billion in cash at hand. A deal would make it the largest technology buyout since the $17.6 billion acquisition of Freescale Semiconductor by a group of buyers led by the Blackstone Group in 2006.

The Bloomberg report, citing two people with knowledge of the matter, said the talks were preliminary. It cautioned that the firms might not be able to line up financing. The report of the talks comes a week after a top Dell executive, David Johnson, who was in charge of the company’s corporate strategy, including deals, left to join the Blackstone Group. Any buyout would involve Michael Dell, who started the company out of his University of Texas dormitory room in 1984. The chief executive owns nearly 16 percent of the company.

Since Michael Dell returned as chief executive six years ago, Dell has tried to move from its core business of personal computers and computer servers into the more stable and growing business of equipping corporate data centers with hardware and software. Its personal computer and associated laptop businesses, however, still accounts for about half of Dell’s revenue.

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