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Report: Dell in Buyout Talks with TPG, Silver Lake

Dell may be considering leveraged buyout proposals from private equity firms, according to a Bloomberg report on Monday.

The computer giant has not publicly confirmed the rumor, but Wall Street has been buzzing at the prospect of Dell being on the market. Two bidders apparently in the mix include TPG Capital and Silver Lake, with Bank of America Merrill Lynch, Barclays, Credit Suisse and the Royal Bank of Canada in the pipeline to provide financing.

Not surprisingly, CEO Michael Dell is a key player in the negotiations, Bloomberg said. Dell holds an estimated 16 percent stake, valued at about $3.6 billion, in the company he founded in his dorm room back in 1984.

Dell's stock rose 21 percent as of the close of business Tuesday before tapering off more than 4 percent on Wednesday afternoon. Once valued at more than $100 billion during the dotcom boom, a deal today would be valued at approximately $20 billion, ironically in the ballpark of the amount Hewlett-Packard paid for Compaq a decade ago.

Both Dell and HP continue to struggle in the PC market as Asian rivals gain momentum, most notably Lenovo -- which gained prominence after acquiring IBM's PC business in 2004 -- but also Acer and ASUS.

Like HP, Dell is looking to further extend its footprint into the enterprise, as evidenced by numerous acquisitions in recent years such as those of SonicWall, EqualLogic, Compellent, Perot Systems, KACE Networks, Ocarina Networks, Force 10, Boomi, Wyse and AppAssure. Most recently, Dell extended its push into enterprise software with the $2.4 billion acquisition of Quest Software.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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