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Dell reboots the take-private market

The buyouts of Dell and Heinz are big but they share few characteristics of the classic jumbo LBO.

Lionel Assant, senior managing director and European head of private equity at Blackstone in London, says: "They are exceptions. Each deal has a specific equity story, which cannot be easily replicated on other $20 billion-plus deals in the market today."

Under the terms of the Dell buyout, Michael Dell will continue to hold a substantial stake in the company, and will remain its chairman and chief executive.

Dell is committing a mountain of cash to finance the deal, which, when announced in early February, valued Dell’s shares at $13.65 each – a 25% premium to their closing price of $10.88 when speculation of the take-private seeped out in mid-January. In mid-February, however, it emerged that Dell had agreed to value his 16% stake at $13.36 a share – about 2% below the price offered to other shareholders in the company, which are set to vote on the transaction in June or July.

Michael Dell is the driving force behind the transaction, but Silver Lake Partners has helped to raise $15 billion in debt funding from banks, and Microsoft is contributing $2 billion in the form of a loan to take the company private.

"When you look at the contribution to the capital structure in the Dell deal, it says two things," says Nathan at Morgan Stanley.

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