Dell’s buyout rumors have sent the PC makers’ shares soaring 13 percent to nearly a eight-month high after Bloomberg confirmed the reports that Texas based firm is discussing a leveraged buyout with private-equity firms TPG Capital and Silver Lake. Dell shares’s rose $1.41 to close at $12.28, making Dell’s market value about $19 billion.
For Dell to go private, CEO and founder Michael Dell and private-equity firms would be required to raise more equity and debt than any deal since 2007. The leveraged buyout may also require the backing of Michael Dell, who is company’s largest shareholder with a 15.7 percent stake.
Dell, which has ceded market share to Hewlett Packard and Lenovo, has has lost 40 percent of its value since last year’s peak. Dell has been trying hard to reinvent itself as a seller of higher-margin services to corporations as the advent of tablets has left the company grappling with decreasing demand for desktop and laptop computers.
By going private, Dell would free itself from the changes of stock market due to company’s inability to adapt to an industry-wide shift to mobile and cloud computing. Dell’s buyout will also allow Michael Dell to gain added flexibility to challenge Apple and Samsung Electronics for consumers.
Dell’s buyout deal, which could be announced as soon as this week, would be an expensive affair, despite a 30 percent drop in Dell’s share price during the past year. If rumors come out to be true, then Dell’s buyout of the $19 billion company would be one of the largest deals since the global recession.
Meanwhile, Dell has made no comments regarding the buyout, saying it does not comment on rumors or speculation.