Wednesday, February 6, 2013
How Does Microsoft Fit Into Dell's $24.4 Billion Buyout?
First things first -- if you haven't heard by now, Dell is going private. Michael Dell, with the help of private equity firm Silver Lake and a significant loan from Microsoft, have agreed to pay Dell's public shareholders $13.65 a share, valuing the transaction at $24.4 billion. Now Mr. Dell is free to run the company without having to answer to shareholders, and while it will likely be years before we know if this was in the best interest of Dell, there's an interesting side story involving Microsoft that deserves attention.
Without Microsoft's $2 billion loan, either this deal doesn't go down, or another company with that kind of cash to spend steps in. What's Microsoft's play in all this?
"Microsoft has provided a $2 billion 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," Microsoft said in a statement.
"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," the company added.
So there's Microsoft's official explanation on why it got involved to the tune of $2 billion. As far as what it's willing to admit, Microsoft's play is that it has an obvious vested interest in the PC ecosystem, and apparently it believes, as Michael Dell does, that taking Dell private is the right move at this time...
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