■ Computer maker Dell taken private in largest leveraged buyout since before the financial crisis
■ US billionaire John Malone closes in on $20bn deal for UK telecoms giant Virgin Media
TWO of the biggest buyout deals since the financial crisis struck were revealed yesterday, as British communications firm Virgin Media and US computer giant Dell moved towards deals valued at more than £12bn each.
Virgin Media, the UK’s second largest broadband supplier, signed off on talks late last night with US billionaire John Malone’s Liberty Global over a deal expected to be worth around $20bn (£12.8bn).
Meanwhile, PC manufacturer Dell ended weeks of speculation over its future by announcing a $24.4bn private buyout led by chief executive Michael Dell. The deal is the biggest leveraged buyout since Blackstone took Hilton Hotels private for $26bn in July 2007.
Dell has struggled in recent years as consumers shun new PCs in favour of tablets and smartphones and as competition from the East has surfaced.
Michael Dell, who founded the Texas-based company in 1984, is rolling over his 14 per cent stake as well as putting in a sizeable portion of an estimated $16bn fortune.
Buyout specialists Silver Lake Partners will put cash into the deal, and Microsoft, which counts Dell as one of its biggest customers, is contributing a $2bn loan. Bank of America Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets are adding debt financing.
“I am committed to this journey and I have put a substantial amount of my own capital at risk together with Silver Lake, a world-class investor with an outstanding reputation,” Michael Dell said yesterday.
Microsoft, which is looking to revive a PC industry which saw shipments fall for the first time in a decade last year, said it is “committed to the long term success of the entire PC ecosystem” and that it “invests heavily in a variety of ways to build that ecosystem for the future”.
However, Hewlett Packard, the world’s biggest PC manufacturer, issued an unusual jibe at its rival. “Dell has a very tough road ahead. The company faces an extended period of uncertainty and transition that will not be good for its customers,” HP said.
Virgin Media yesterday confirmed it was in talks with Liberty Global over “a possible transaction”. This is understood to be a sale, which could be announced as early as today, when the broadband, pay TV and mobile phone company announces its annual results.
The two parties met in New York last night to sign the deal, which will pit Malone against his old rival Rupert Murdoch, who owns 39 per cent of Virgin Media competitor BSkyB.
Following the announcement, shares in Virgin Media shot up 18.5 per cent in New York to value the firm at $12.4bn. The British company has almost £6bn in debt.