Microsoft Joins Talks To Buy Out Dell Shareholders

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Microsoft is talking with Dell about financing its buyout. The deal is reported to be worth about $2 billion.

For the past few weeks there have been reports that Dell has been in talks with Silver Lake Partners, a private equity firm, to buy out the public shareholders. It has been reported that the buyout would be $13 to $14 per share. CNBC broke the Microsoft news this morning.

The big question has been about who would be able to actually manage such a buyout. Silver Lake has been shopping around to banks, pension funds and others, but this is the first report of an actual investor coming forward.

But why is Microsoft interested? It may come down to its play in the hardware market with the Microsoft Surface, and, as the Wall Street Journal reported today, Microsoft’s Steve Ballmer says they need a diverse group of companies making personal computers that are powered by Microsoft software.

My question is about the success Dell is having in making the transition to becoming an enterprise solutions company. With being a public company comes the pressure of needing to satisfy shareholders. That means milking the cash as much as possible from the traditional business groups. New efforts, like around developing a cloud strategy, become less important even though critical to the future of the company.

Going private would mean that Dell could focus its attention where it believes it has the most potential for growth. That could give its enterprise strategy more strength.

On the flip side, these buyouts can be brutal, often seeing the company stripped down and then built back up.

Inevitably, you have to ask about Michael Dell and whether he will stay with the company. I am not so sure. He seemed to enjoy having President Bill Clinton on stage at Dell World. Perhaps his future is in politics. The idea does not seem so far fetched, really.