The founder and chief executive of Dell, Michael Dell, will gain power and influence after the company becomes private, according to a media report. Thanks to the shares he already owns, plus additional funds as well as the stock that is owned by the company itself, Dell will get the full power to reposition the company amid turmoil on the PC market.
Michael Dell personally owns 15.7% stake in the company he founded, in addition, he plans to contribute equity financing of $500 million to $1 billion into privatization of Dell. When his stake and planned equity are combined with part of $11 billion the PC maker has in cash, Michael Dell could gain majority control of the company after [and if] the buyout happens, reports Bloomberg news agency.
Just like a number of other old-school PC makers, Dell needs to be reformed in order to provide competitive products and services for the new always-connected era. The majority control will naturally allow Mr. Dell to streamline and reposition the company’s business according to his own vision, without taking opinion of public investors into consideration.
According to media reports, Microsoft proposed to contribute up to $2 billion or more of in the form of a preferred security as part of a deal to take Dell private. The sides are currently negotiating the deal and one of the terms is claimed to be Dell’s agreement to use Microsoft’s Windows operating system for as many devices as possible. Moreover, Microsoft wants to have a power to vote on Dell’s strategic and operating decisions, something that could help the software company to avoid competition between Dell and its own hardware business. However, that naturally could create a conflict between Microsoft and Dell.
Silver Lake, a private equity firm, is reportedly working with numerous potential investment partners to acquire Dell and take the company private in order to transform it into a more competitive company. While Microsoft could provide necessary financing, there may be a conflict of interests between the software giant and the PC maker. Microsoft late last year announced plans to become a software, hardware and services company. As a result, Microsoft essentially starts to compete not only against its natural rivals on the software market, but also against its own customers in hardware and services businesses. In addition, Dell could also be interested in using more Google Android operating system for some of its consumer-oriented products.
Dell, Silver Lake, Microsoft and other companies mentioned did not comment on the news-story.