Bloomberg News

Dell Buyout Would Be ‘Real Stretch,’ Professor Says

January 15, 2013

Potential buyers of Dell Inc. (DELL:US), the struggling personal-computer maker, would have a difficult time getting enough funding to complete a deal, said Bill George, a professor at Harvard Business School.

While the cost of money is relatively cheap these days, lining up private capital for a company with a market value of about $22 billion and $9 billion in debt is a challenge, he said today on the “Bloomberg Surveillance” show.

“It’s a real stretch,” George said. “Putting together these funds is a lot tougher than people think.”

Dell, the third-largest PC maker, is discussing a leveraged buyout with private-equity firms TPG Capital and Silver Lake, a person with knowledge of the matter said yesterday. Its stock had lost 43 percent over the past five years, compared with a 3.8 percent gain by the Standard & Poor’s 500 Index.

George compared Dell’s situation with the slow efforts to take Best Buy Co. private, saying some of the same people are involved. Richard Schulze, Best Buy’s founder, has been working with three private-equity firms, including Cerberus Capital Management LP, on a takeover of the electronics chain, people familiar with the matter have said.

Shares of Round Rock, Texas-based Dell rose 7.2 percent to $13.17 at the close in New York, following a 13 percent jump yesterday when Bloomberg first reported on the buyout talks.

To contact the reporters on this story: Karl Baker in New York at kbaker30@bloomberg.net; markdeen@bloomberg.net; Tom Keene in New York at tkeene@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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