Shares in Dell soar on buyout reports
Shares in computer manufacturer Dell are advancing amidst speculation that founder Michael Dell might take the firm private.
The shares closed up by 13 per cent in New York last night and were up by 2.9 per cent in Germany today, as it was reported that Dell, the third-largest personal-computer maker, is discussing a leveraged buyout (LBO) with private-equity firms TPG Capital and Silver Lake.
Such a move would free Dell from having to report to the stock market and to investors that have lost patience with its shrinking PC division and its inability to adapt to shift to mobile and cloud computing.
“They could generate a tremendous amount of cash for many years to come, or they could be more dramatic and invest heavily in a mobile strategy -- and not be scrutinized by public investors every quarter while they did it,” said Rich Kugele, an analyst at Needham and Co.
Dell’s stock has lost 43 percent in the past five years, compared with a 3.8 per cent gain by the Standard and Poor's 500 Index. A buyout would require pulling together more than $20 billion in equity and debt.
Dell employs amore than 2,000 people in Ireland, having substantially restructured its Irish operations in recent years.
(Additional reporting Bloomberg)