Microsoft’s $2 billion loan to assist Dell to go private in $24.4 billion deal

    Infotech Lead America: Microsoft will offer $2 billion loan for a deal between Michael Dell, founder of Dell, and investment firm Silver Lake, in the management buyout of Dell for $24.4 billion.

    Microsoft in a statement said it has provided a $2 billion loan to the group that has proposed to take Dell private. Microsoft is committed to the long term success of the entire PC ecosystem and invests heavily in a variety of ways to build that ecosystem for the future.

    Microsoft says it will continue to look for opportunities to support partners who are committed to innovating and driving business for their devices and services built on the Microsoft platform.

    Dell’s revenue in the third quarter was $13.7 billion, an 11 percent decrease from the previous year as desktop and mobility revenue contracted. Its net income during the period decreased 31 percent to $679 million.

    Michael Dell said this transaction would open an exciting new chapter for Dell, customers and team members.

    Silver Lake will assist Dell in its transformation strategy to become an integrated and diversified global IT solutions provider.

    Dell, who owns approximately 14 percent of Dell’s shares, will lead the company as chairman and CEO.

    READ Reuters shares history of Dell HERE

    The transaction will be financed through a combination of cash and equity contributed by Dell, cash funded by investment funds affiliated with Silver Lake, cash invested by MSD Capital, a $2 billion loan from Microsoft, rollover of existing debt, as well as debt financing that has been committed by BofA Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets, and cash on hand.

    The Silver Lake portfolio includes or has included technology industry leaders such as Alibaba, Allyes, Ameritrade, Avago, Avaya, Business Objects, Flextronics, Gartner, Gerson Lehrman Group, Groupon, Instinet, Intelsat, Interactive Data Corporation, IPC Systems, MCI, Mercury Payment Systems, MultiPlan, the NASDAQ OMX Group, NetScout, NXP, Sabre, Seagate Technology, Serena Software, Skype, Spreadtrum, SunGard Data Systems, UGS, Vantage Data Centers and Zynga.

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