Microsoft (MSFT) Joins Silver Lake in Another Massive Takeover Effort (DELL)
Microsoft (Nasdaq: MSFT) is lower on the session amid chatter that it might join a group aimed at acquiring Dell, Inc. (Nasdaq: DELL).
Reported earlier this morning CNBC, the WSJ today said the Microsoft's investment in any deal might be just a couple billion dollars, a small percentage of the $23 billion to $25 billion Dell is expected to command in a deal. Leading the charge would be private equity firm Silver Lake, which is said to have already secured about $15 billion in financing.
CNBC's David Faber said Microsoft's investment might be in the form of a preferred security offering rather than straight cash.
This wouldn't be the first time Microsoft and Silver Lake collaborated over a deal of this size; in 2011, the two joined forces along with the Canada Pension Plan Investment Board to buy all of Internet search company Yahoo!, Inc. (Nasdaq: YHOO). In addition, Microsoft acquired Skype for $8.5 billion in 2011 and Silver Lake having a $1 billion investment in Skype at the time. Silver Lake is said to have gotten a 300 percent return on that investment.
The WSJ notes that Microsoft has said in the past it was willing to invest in companies it sees as promising or essential to its own business. Given that Dell is one of the largest makers of Windows-equipped PCs in the world, that might make Dell an "essential company."
Dell has yet to produce a successful smartphone or tablet computer and the PC segment is a shrinking business.
Well, maybe Dell would be a perfect fit for Microsoft after all.
Shares of Microsoft are down about 0.3 percent Tuesday, while Dell is up 2.6 percent.