Dell subject to Private Equity takeover speculation

2012 was another disappointing year in terms of Global M&A, with deal values once again down on the previous 12 months. The one bright spot on the horizon was private equity, which showed another year on year increase in terms of announced deal values.

We are now just two weeks into 2013 and there have already been some high profile news stories about private equity takeovers. Today’s involves Dell, the world’s third-largest PC maker.

According to reports in the press, Dell is in talks to delist itself and go private with the backing of at least two private equity firms, TPG and Silver Lake, in conjunction with unnamed pension funds. Dell has been struggling to maintain its market share, with heavy competition in recent times coming from Hewlett Packard and Lenovo, and has ambitiously tried to move away from reliance upon the personal PC market and position itself more aggressively in the corporate sector.

As a listed company, any strategic realignment is always carried out in the full view of the markets and often impacts upon share price without necessarily good cause. Going private would allow Dell to fully implement any strategic overhaul it felt necessary, but would no doubt bring with it a substantial debt burden.

It is a choice that only chief executive and founder Michael Dell, who still retains around 14.0 per cent of the company, can make.