Microsoft in talks to team up with Silver Lake on Dell buyout

Microsoft HQ, Washington state

US software major Microsoft Corp (NASDAQ:MSFT) is in discussions with private equity firm Silver Lake Partners and Dell Inc’s (NASDAQ:DELL) founder Michael Dell to help fund a buyout of the personal computers maker through a USD2bn (EUR1.5bn) investment, the Wall Street Journal reported today citing knowledgeable sources.

As part of the arrangements being negotiated, Microsoft would receive preferred security in return for its investment, giving it a stock-ownership stake in the target. On the other hand, Dell would agree to use Microsoft’s Windows software for most of its devices. According to the sources, a deal, which will take Dell private, will be sealed within a week.

The purchase price, which is seen to be USD22bn or more, is expected to be covered with a USD15bn loan from four banks, as well as with cash to be provided from Silver Lake’s equity, Michael Dell’s nearly 16% stake, and probably Dell’s existing cash resources and the investment from Microsoft.

Spokesmen for Microsoft and Dell refused to comment.

Earlier this week, Bloomberg cited sources as saying that Dell had appointed investment bank Evercore Partners Inc (NYSE:EVR) to scout for higher bids in a so-called “go-shop” process if a takeover by Silver Lake was announced.

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