Michael Dell has succeeded in raising $24bn funding to buy back the computer company he founded in 1984, thanks in part to a $2bn loan from Microsoft.
According to the FT, Silver Lake Partners will contribute financing to the deal, while Michael Dell will effectively put in $3.8bn of his own money, by rolling over his 15.7% stake in the company.
In a statement on the loan, Microsoft said: “Microsoft has provided a $2bn loan to the group that has proposed to take Dell private. Microsoft is committed to the long term success of the entire PC ecosystem and invests heavily in a variety of ways to build that ecosystem for the future.
“We're in an industry that is constantly evolving. As always, we will continue to look for opportunities to support partners who are committed to innovating and driving business for their devices and services built on the Microsoft platform.”
Writing previously on the Dell buyback, Forrester analyst David Johnson expect the deal would not have an adverse expect on businesses that use Dell equipment. He said the company’s strategy is to reinvent itself, changing from PC and server vendor, to an end-to-end solutions vendor.
“It's easy to draw comparisons to IBM and Lenovo, and one could argue that the case for running a hardware [manufacturing] business out of the US is sketchy, but IBM had many other very strong businesses to fall back on. PCs still make up a significant piece of the pie for Dell and they'll need the cash-flow to double-down on the areas where they can drive new value and differentiation," he said.
Computer Weekly says:
It is interesting to see the loan Microsoft has given Dell to support the PC ecosystem. It did the same thing with Apple in 1997, with a loan of $150m to facilitate sales of Microsoft Office on the Mac. However, this time Microsoft’s support goes against what appears to be the main driver for the buyback – namely to facilitate a plan that will ultimately lead to Dell offloading the PC business. But as Forrester’s Johnson points out, Dell is still very much a PC company, and will need to focus on establishing it as a software and services business.