Microsoft may invest $1B-$3B in Dell buyout -- CNBC

The network's David Faber, citing sources, says the Redmond, Wash., software giant is in talks with Silver Lake to help take Dell private.

Microsoft
Microsoft may contribute $1 billion to $3 billion to help take Dell private, according to a new report.

CNBC's David Faber, citing sources, said the Redmond, Wash., software giant is in talks with Dell CEO Michael Dell and Silver Lake Partners, the private equity firm eyeing a Dell buyout. He noted the investment wouldn't necessarily give Microsoft a significant equity stake in the company, but would help raise the funding needed to complete a deal.

Dell declined to comment, as did Microsoft.

Bloomberg initially reported last week that Dell was looking to go private. The Wall Street Journal later followed with its own report that Silver Lake, Michael Dell, and at least one other investor were hoping to complete a $22 billion to $25 billion leveraged buyout.

To meet an asking price of $13 to $14 a share, or $22 billion to $25 billion, Silver Lake and the other investors would need to put up $2 billion in equity, the Journal said at the time. Michael Dell could use his existing stock, worth around $3.6 billion, according to the Journal. More funds could come from cash on Dell's balance sheet and new debt of around $15 billion.

Microsoft CEO Steve Ballmer and Michael Dell have appeared very chummy of late, even doing a joint interview with the New York Times for the Windows 8 launch in October. It's not a big stretch to believe the two CEOs are in talks about an investment by Microsoft.

Microsoft, meanwhile, is no stranger to investing in other tech companies. In recent years, it has given money to Facebook, Barnes & Noble, and Comcast, and it also invested in Apple when it was struggling. However, investing in a close partner like Dell could be tricky for Microsoft.

Dell is one of the world's biggest PC makers, and it has long been closely tied to Windows. However, the company has struggled of late as it tries to shift its focus away from its traditional computer market to providing business products like networking and storage. Going private would give Dell time to explore other operating systems and markets, but a sizeable Microsoft investment would all but ensure that Dell won't stray from the Windows path.

At the same time, Microsoft risks upsetting other PC makers by investing in Dell. Microsoft already has angered its partners by introducing its own computer hardware, the Surface tablet, and companies have been trying to navigate their new relationship with Microsoft .

Here's the full CNBC video:

(Via Business Insider)

Updated at 9:40 a.m. PT with Microsoft declining to comment.
 

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