Talks to take No. 3 computer maker Dell Inc private are in an advanced stage with at least four major banks lined up to provide financing, two sources familiar with the matter told Reuters on Tuesday.
Buyout firm Silver Lake Partners, which is leading the deal, tapped Credit Suisse, Bank of America Merrill Lynch , Barclays and RBC late last year to finance a potential deal, the sources with knowledge of the matter said on condition of anonymity, because no details have been made public.
They said JPMorgan is advising Dell on a potential buyout of the $19 billion company, which would be one of the largest deals since the global recession.
Silver Lake is working with one of its major investors, known as limited partners, the sources said.
The sources cautioned that the deal could come soon but that the situation is still fluid.
Dell, Bank of America, RBC, Barclays and Credit Suisse declined to comment. JPMorgan and Silver Lake did not immediately return calls seeking comment.
Potential buyers of Dell Inc., 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 Tuesday 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 Monday. 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 Monday.
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