Which private equity firm is among those disinterested in a Dell LBO? Apparently that’s the Blackstone Group.
Bloomberg Television asked Stephen Schwarzman, Blackstone’s CEO, whether the buyout shop ever considered buying Texas-based PC maker. “We did not look at that company,” said Schwarzman. “Part of that is in the PC business where it is a tough road. The financial elements of the deal are very clever. I think the issue will be how the business actually performs.”
Schwarzman, who was speaking from the World Economic Forum in Davos, Switzerland, said it was “a pretty clever thing” for Dell to engage in buyout talks. “[Dell’s] stock was way down,” he said. “They have a lot of cash. He is an owner/founder and so the form that your company takes is not as important as how well the company is doing. If he has optimism about his company and if the market is not appreciating it, he is actually in a pretty unique position to be able to take his stock, contribute it into the deal to provide a lot of the equity, and just deal with his company as a private company where he could make certain changes that would be perhaps more difficult in a public setting.”
The Dell buyout, which is valued at $22 billion or more, has consumed the media recently. Last week, Bloomberg News reported that Dell was in talks with two PE firms to go private. Silver Lake Partners, which is leading the deal, tapped Credit Suisse, Bank of America Merrill Lynch, Barclays and RBC late last year to finance a potential deal, Reuters reported. Yesterday, CNBC said that Microsoft was also in talks to invest in the takeover of Dell. Microsoft is expected to contribute several billion dollars, the New York Times said. An announcement could come this week, The Wall Street Journal is reporting.
Dell’s large price tag had some heralding the return of mega-LBOs. Schwarzman called such hopes “a little overblown.” [Dell] isn’t your run-of-the-mill situation…This is a pretty unique set of circumstances with a fundamentally unleveraged company with an owner and founder that can put up a lot of the equity to make the deal happen…”
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Photo courtesy of REUTERS/Christian Hartmann