Microsoft loans Dell $2 billion to help them go private

Dell has announced a deal that will allow the company to go private and Microsoft will soon become a significant stakeholder in the private company.

It will cost Dell $24 billion to go private and they will pay $13.65 per share which is about a 25% premium on the stock from when word first broke about the possible deal.

By going private, Dell will no longer have to deal with quarterly earnings reports and can now focus on the long-term without having the hear the cries of shareholders who are looking for short-term gains. Under the deal, Michael Dell is contributing his nearly 16% of the company to make the transaction possible. 

Microsoft had the following to say about the loan that is making this transaction possible:

Microsoft has provided a $2 billion loan to the group that has proposed to take Dell private. Microsoft is committed to the long term success of the entire PC ecosystem and invests heavily in a variety of ways to build that ecosystem for the future.

“We're in an industry that is constantly evolving. As always, we will continue to look for opportunities to support partners who are committed to innovating and driving business for their devices and services built on the Microsoft platform.”

Dell’s board on Monday night approved the deal and we will be curious to see if Acer's CEO fires a few friendly phrases at Microsoft seeing as he thought building the Surface was a bad idea.

Source: Dell | Microsoft

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This resolves a major headache for Microsoft: how do they continue to drive innovation without pi**ing off their OEMs. Invest in the good ones and become their ODM. Microsoft can now produce many more Surface-like devices and ship them under the Dell banner.

Still, I don't see them investing in Acer. Or HP.

Major Plonquer said,
This resolves a major headache for Microsoft: how do they continue to drive innovation without pi**ing off their OEMs. Invest in the good ones and become their ODM. Microsoft can now produce many more Surface-like devices and ship them under the Dell banner.

Still, I don't see them investing in Acer. Or HP.

let us see, what the article states is that MS is making LOAN to the "group" which has bought Dell not that they are part of it. They could require to have some kind of collateral but, usually, this does not grant them a right to vote. It is not as when MS bought shares of Apple... which also turned out to be one of their best investments. The irony of history.....

"By going private, Dell will no longer have to deal with quarterly earnings reports and can now focus on the long-term without having the hear the cries of shareholders who are looking for short-term gains."

Ha...3x, nail on the head!

"I'd shut it down and give the money back to the shareholders."

15 years later, finally Dell acted on his own advice.

a0me said,
"I'd shut it down and give the money back to the shareholders."

15 years later, finally Dell acted on his own advice.

Not "quite" the same thing there... LOL

I thought only Apple had lots of cash sitting around. /s

Less than a 10% stake in the company isn't going yield much if any control. I don't undrstand why everybody is making such a big deal of this.

MrHumpty said,
I thought only Apple had lots of cash sitting around. /s

Less than a 10% stake in the company isn't going yield much if any control. I don't undrstand why everybody is making such a big deal of this.


Based on what the article States it seems that MS is providing a loan to the "group" buying back Dell more than being part of it. It will be interesting to see how things will evolve: a 25% premium on the market value of the stock is not very high and I wonder if someone has already started to buy shares to capitalize on the deal.

MrHumpty said,
I thought only Apple had lots of cash sitting around. /s

Less than a 10% stake in the company isn't going yield much if any control. I don't undrstand why everybody is making such a big deal of this.

So by discussing it, we are making it a big deal? Chill out, dude.

MrHumpty said,
I thought only Apple had lots of cash sitting around. /s

Less than a 10% stake in the company isn't going yield much if any control. I don't undrstand why everybody is making such a big deal of this.

It's a lot more leverage than you might think if the deal was only possible with Microsoft's money. If they tried to to some where else, Im sure other more worrisome strings would have been attached.

MrHumpty said,
I thought only Apple had lots of cash sitting around. /s

Less than a 10% stake in the company isn't going yield much if any control. I don't undrstand why everybody is making such a big deal of this.

Where does it say in the statement that they are getting a stake? I've not seen that corroborated anywhere...

dagamer34 said,
It's a lot more leverage than you might think if the deal was only possible with Microsoft's money. If they tried to to some where else, Im sure other more worrisome strings would have been attached.
While I'd love to believe they they are raising 22B other dollars w/o Microsoft's. The idea that Microsoft will have a tangibly higher level of influence than the other investors is just not plausible. Not to mention, it is just a loan.

COKid said,
So by discussing it, we are making it a big deal? Chill out, dude.
Numerous articles about a small loan with stake in the company as collateral. Yea, this is making a "big deal" out of seemingly nothing.

M_Lyons10 said,
Where does it say in the statement that they are getting a stake? I've not seen that corroborated anywhere...
If they are loaning the money to someone that is secured by something. Obviously it is an assumption, but a highly plausable.

Fritzly said,
Based on what the article States it seems that MS is providing a loan to the "group" buying back Dell more than being part of it. It will be interesting to see how things will evolve: a 25% premium on the market value of the stock is not very high and I wonder if someone has already started to buy shares to capitalize on the deal.
Agreed. It's just such a small amount I don't know why this warrents so much attention. Now, Dell going private, that's a big deal. I'd much rather see articles covering the implications of that act, not Microsoft *loaning* 10% of the buyout value to the investors doing it.

I have to wonder, whats in it for Microsoft... maybe a partner ship like they have with Nokia on Windows Phones, but tablets or maybe even become their offical as the Dell 'Surface Windows Phone'.

Microsoft certainly likes to stick their fingers in all the pies.

Microsoft is probably ensuring Dell's long time security, as Dell sells a lot of Windows licences both Client and Server, so Microsoft doesn't want Dell to go anywhere soon.

Microsoft should take the Alienware name and put it into their consoles. Alienware powered Xbox, £2000 lol.

sagum said,
I have to wonder, whats in it for Microsoft...

I wouldn't rely on Dell to make a successful phone or tablet. It's more likely that it's to protect the Windows PC market (even though there's no significant threat/competition at the moment). By loaning them $2 billion, Dell is almost obliged to stick with Windows in the foreseeable future.

Manish said,
I wouldn't rely on Dell to make a successful phone or tablet. It's more likely that it's to protect the Windows PC market (even though there's no significant threat/competition at the moment). By loaning them $2 billion, Dell is almost obliged to stick with Windows in the foreseeable future.

Not only that but their distribution capabilities which Microsoft may piggy back upon when it comes to surface sales.

Manish said,

I wouldn't rely on Dell to make a successful phone or tablet. It's more likely that it's to protect the Windows PC market (even though there's no significant threat/competition at the moment). By loaning them $2 billion, Dell is almost obliged to stick with Windows in the foreseeable future.

What's sad is I'm sure an updated Dell Venue Pro would make for an excellent business phone for people who still want a hardware keyboard. The design of the phone was great, the execution is what was poor.

dagamer34 said,

What's sad is I'm sure an updated Dell Venue Pro would make for an excellent business phone for people who still want a hardware keyboard. The design of the phone was great, the execution is what was poor.

Which is where Dell has fallen on their face for years. They design something decent (Or even good) and then build the cheapest piece of garbage they can and sell it at a premium.

M_Lyons10 said,

Which is where Dell has fallen on their face for years. They design something decent (Or even good) and then build the cheapest piece of garbage they can and sell it at a premium.


Very true indeed, I still have an old, even ancient, Dell with a Pentium Pro processor and it works without a glitch. To make things worse not only they dropped the quality of their components but they also destroyed their customers service, unless you opt-in for the premium business one.
Granted quality has a cost it considering that people tend to keep their boxes for a longer period of time than before, a reasonably, not cheap, system backed up by an effective customer service would be,IMO, a winning strategy.