Charles Arthur for The Guardian:
Michael Dell has the won the battle for control of the computer company that he created, after shareholders backed his $24.8bn (£15.7bn) offer to take Dell private and revive the struggling business away from the incessant pressure of Wall Street.
Dell aren’t in tablets, they aren’t in smartphones, and their core technology partner Microsoft is becoming an ever-more vertically integrated company. PC sales are falling off a cliff, and their traditional competitors like HP & Acer are struggling too. They need to move, and they need to move fast.
Reuters reports this tidbit, which I found interesting:
The financing package also will include an up to $2 billion 7.25 percent 10-year subordinated note issuance from Microsoft.
Why would Microsoft loan Dell $2 billion? Well, for one, they’re incredibly cash-rich, and like the Nokia deal, this is another way they can utilize some of their cash hoard without having to subject it to repatriation to the United States, where at 35% income tax would be levied. Plus, y’know, a 7.25% interest rate ain’t too shabby either.
Of course, Microsoft needs Dell to be a healthy company too. A two billion dollar loan (out of a $25 billion buyout deal) is enough to save a company they need to sustain the PC ecosystem without alienating all their other PC making partners. In 2011, Microsoft didn’t loan money to Nokia, they just straight-up gave it to them. I can’t help but wonder if this two billion dollars is a relationship-building loan between Dell and Microsoft that leads to an acquisition somewhere down the road. Not today, but someday.