Dell buyout talks see its shares surge

Dell is in buyout talks with private equity firms, according to sources.

Tue, 15 Jan, 2013 - 00:00

Serena Saitto and Geoff Percival

The company’s shares surged on foot of the news. The company is discussing going private with at least two firms, one of the sources said.

Several large banks have been contacted about financing an offer, one of the sources said. The computer maker had a market value of $18.9bn (€14.13bn) as of Jan 11.

Chief executive Michael Dell has been using acquisitions to help the company he founded sell more computers and services to businesses.

Dell, the third-largest PC maker, is struggling to regain share in the market as consumers switch to tablets, including Apple’s iPad, and smartphones such as the handsets that use Google Inc’s Android operating system.

Shares in Dell, based in Round Rock, Texas, jumped after Bloomberg reported the talks, climbing 12% to $12.21 as of 2.15pm in New York.

The CEO of Dell owns 15.7% of the company, making it easier for firms to put together equity financing for the deal, one of the people said.

Michael Dell founded the company in 1984 in his University of Texas dorm room with $1,000. He was then aged 19.

He catapulted it to the top of the industry by cobbling together PCs from off-the-shelf parts and delivering them directly to consumers at a lower cost than rivals, including IBM.

Dell lost the top spot to Hewlett-Packard in 2006 and more recently it has struggled to contend with new rivals, such as Apple in the consumer market.

A Dell buyout could be the largest acquisition in the computer industry since Hewlett-Packard acquired Compaq Computer Corp for about $19bn in 2002, the data show.

Speaking yesterday, general manager at Dell Ireland Dermot O’Connell said customers are likely to continue to invest in expensive solutions and services this year.

Dell has invested heavily on transforming its Irish operations from just product distributor to full service provider; it now employs 2,500 people across its software, business services and marketing offices in Cork, Dublin and Limerick.