Dell’s Likely Buyer: Silver Lake Principals Have Great Tech Track Record

 @DavidZie
on January 17 2013 10:54 AM
Michael S. Dell
Michael S. Dell, CEO, Dell Inc. (NASDAQ:DELL), which agreed to a $24.4 billion buyout on Feb. 5. Reuters

For six weeks, buyout speculation has surrounded Dell (NASDAQ:DELL), the No. 3 PC maker, boosting its shares more than 22 percent and the company’s market value more than $4 billion.

The prime force behind the buyout is said to be Silver Lake Partners, the Menlo Park, Calif., private equity company with assets exceeding $14 billion and which may have recently raised an additional $7 billion from investors, mainly pension funds, mutual funds and individual millionaires.

Silver Lake as a P/E investor, would be the leader of a group, also said to include Temasek, Singapore’s state holding company and the Canadian Pension Plan Investment Board, that would bid for the entire company, then presumably manage it along with founding CEO Michael S. Dell.

In Thursday trading, Dell shares rose another 21 cents to $12.82, still far below their 52-week high of $18.36.

The deal would require bank loans from a syndicate of banks, headed by JPMorgan Chase (NYSE:JPM), and several others and be valued around $22 billion, the current market price of the company, making it the largest technology buyout since the 2007 buyout of Freescale Semiconductor (NYSE:FSL) by three other P/E giants.

Dell, 47, who currently owns 15.7 percent of the Round Rock, Tex., company he founded in his University of Texas dormitory 29 years ago, would clearly be left in place, but a new board of directors, picked by the new owners, would review strategy and progress at the company. The move would mean Dell himself would be reporting to others in a different fashion.

Silver Lake has an array of technology alumni, all of whom might be very effective collaborators, especially if a “new” Dell seeks to accelerate its transformation to a key provider of technology services and software, rather than PCs and servers.

Among them are:

Charles Giancarlo, the former executive VP and chief development officer at Cisco Systems (NASDAQ:CSCO), the No. 1 provider of Internet products, who was the top strategist for CEO John T. Chambers. He came to Cisco when his company, Kalpana, was acquired. He previously started four technology companies that were acquired by others.

Giancarlo helped move Cisco into new services like video, including its acquisition of Scientific-Atlanta, and many other areas including network security and data management.

John Chen, who was CEO for years of Sybase, the respected database specialist and rival to Oracle Corp. (NASDAQ:ORCL), the No. 1 database company, which was acquired by Germany’s SAP AG (NYSE:SAP) in 2010. An electrical engineer with wide technology links, Chen is also one of the most prominent Chinese Americans in the sector.

Dell has major operations in China and might need help battling better-established players like International Business Machines Corp. (NYSE:IBM), the No. 2 computer company, in the Chinese market for software and services.

Mark Lewis, for years a senior strategy adviser at EMC Corp. (NYSE:EMC), the No. 1 maker of storage products, which has long been a Dell partner. At EMC, Lewis helped CEO Joe Tucci acquire more than 31 companies, including security software specialists like RSA Security and virtualization specialist VMware (NASDAQ:VMW).

Glenn Hutchins, the Silver Lake co-founder, who remains Chairman of SunGard Data Systems, which Silver Lake and other P/E firms took private in 2005 in an $11.3 billion deal, then the largest technology P/E purchase.

SunGard, a provider of services for Wall Street banks as well as the university sector, has changed CEOs and continued to operate profitably under private management.

Greg Hughes, a former senior VP at Symantec (NASDAQ:SYMC), the leading provider of Internet security products. Previously, he was the senior VP of Veritas Software, a smaller company acquired by the San Jose, Calif., company.

Miles Flint, the former chairman of Skype, the Internet telecommunications company acquired by Microsoft Corp. (NASDAQ:MSFT), the No. 1 software company, in 2011. He also had been president of the now-disbanded Sony Ericsson Mobile Communications, a joint venture of Sony Corp. (NYSE:SNE) of Japan and L.M. Ericsson (NYSE:ERIC) of Sweden. He helped launch the Walkman.

Aside from these principals, Silver Lake also has more than a dozen former technology bankers, venture capital alumni and financial specialists.

 

 

 

 

 

 

 

 

 

 

 

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