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Wednesday, January 23, 2013

Daily Report: Microsoft May Back Dell Buyout

Microsoft is in talks to help finance a takeover bid for Dell that would exceed $20 billion, report Michael J. de la Merced and Nick Wingfield in The New York Times. Microsoft is expected to contribute up to several billion dollars.

They write that an investment by Microsoft could be enough to push a leveraged buyout of the struggling computer maker over the goal line. Silver Lake, the private equity firm spearheading the takeover talks, has been seeking a deep-pocketed investor to join the effort. And Microsoft, which has not yet made a commitment, has more than $66 billion in cash on hand.

The private equity firm was part of a consortium that sold Skype, the online video-chatting pioneer, to Microsoft for $8.5 billion nearly two years ago. And the two companies had discussed teaming up to make an investment in Yahoo in late 2011, before Yahoo decided against selling a minority stake in itself.

Why Microsoft would put is money into Dell, which has been losing market share of the PC business, is clear. A vibrant Dell is an important part of Microsoft’s plans to make Windows more relevant for the tablet era, when more and more devices come with touch screens. Dell has been one of the most visible supporters of Windows 8 in its products.

That has been crucial at a time when Microsoft’s relationships with many PC makers have grown strained because of the company’s move into making computer hardware with its Surface family of tablets.

Dell, the third-biggest maker of PCs in the world, recorded a 21 percent decline in shipments of PCs during the fourth quarter of last year from the same period in 2011, according to IDC.

Microsoft has been willing to open its purse strings in the past to help close partners. Last April, Microsoft committed to invest more than $600 million in Barnes & Noble’s electronic books subsidiary, in a deal that ensures a source of electronic bo! oks for Windows devices. Microsoft also agreed in 2011 to provide the Finnish cellphone maker Nokia billions of dollars’ worth of various forms of support, including marketing and research and development assistance, in exchange for Nokia’s adopting Microsoft’s Windows Phone operating system.