by Anton Shilov
01/29/2013 | 11:25 PM
Microsoft Corp. is reportedly seeking influence on Dell’s decision making process should the software giant invest into the company during the privatization process that is expected to begin in the foreseeable future. It is unclear whether Dell is interested in allowing a third party to influence its choices as the company requires a significant makeover.
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, reports the Wall Street Journal, 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.
The value of the deal is currently expected to be $22 billion or more, if completed. As presently anticipated, it would comprise the nearly 16% Dell stake of founder and chief executive Michael Dell, contributions from private-equity firm Silver Lake Partners and Microsoft, as well as about $15 billion in debt financing arranged by banks.
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.
Microsoft and Dell did not comment on the news-story.