Report: Dell $15 Billion Private Equity Buyout Near?

Dell (NASDAQ: DELL) may be inching closer to a $15 billion mega buyout to take the company private, engineered by Silver Lake Management with big name lenders Credit Suisse, Royal Bank of Canada, Barclays and Bank of America involved, according to a report in Bloomberg News. Here’s the chatter for channel partners.

The lending group is set to impart financial terms of a bridge loan to a small group of potential buyers, the report said. Should Dell pull off the deal, private ownership might enable executive management room to make different financial choices given the vendor’s strategic direction away from relying on PCs and toward integrated solutions, and possibly afford it additional avenues to raise money beyond the scrutiny of shareholders or a public board of directors. What could emerge is a more nimble, agile solutions supplier better able to meet the needs of data center, infrastructure-centric customers. Still, at this point, who knows?

Negotiations appear to be moving swiftly since news of the potential for a buyout surfaced, negating perhaps the early general consensus in the financial community that the difficulty of putting the necessary package together made it a longshot at best. At its current share price of $12.85, Dell’s market value stands at more than $22 billion. Chief executive Michael Dell, who reportedly was an early investor in Silver Lake’s equity fund, owns nearly 16 percent of Dell.

According to Bloomberg, Michael Dell would include his stake in the transaction, amounting to about $3.5 billion, or nearly 25 percent, of the required funding to consummate the deal. Right now, the lenders are taking the temperature of possible investors to determine if they can “syndicate” the financing into smaller pieces once the terms of the deal are hammered out. Bloomberg reported that a special Silver Lake fund commands $7 billion in newly-raised money which could swell to as much as $10 billion, all of which is slotted exclusively for IT companies.

Silver Lake Partners fund has some $14 billion in assets under management with a portfolio that includes notables Avaya, Flextronics, Seagate, SunGard and others. Three years ago, Silver Lake purchased from eBay a majority position in Skype in a deal that ultimately saw Microsoft buy the IP telephony company for some $8.5 billion.

In November, Silver Lake nabbed IT veteran John Chen, the former chief executive of mobile business applications vendor Sybase, as a senior advisor.

As for the channel, its difficult to say what it would mean for partners should Dell effect the private buyout. With channel partners accounting for some 30 percent of the vendor’s revenue, and with Dell’s move toward integrated hardware, software, services, storage and networking solutions, it’s easy to see a scenario under which partners would thrive. One thing is for certain: Dell wants to change.