Dell’s not-so-secret attempt to go private is getting even more interesting. Microsoft will reportedly kick in between $1 billion and $3 billion to help make the deal happen, according to CNBC’s David Faber.
The software giant is in talks with Silver Lake, the leading investors behind Dell’s buyout, and founder Michael Dell. Faber notes that Microsoft’s stake would be a mezzanine investment. Mezzanine financing often takes the form of debt or preferred stock, and it would be a way for Microsoft to soften the blow of the deal for Silver Lake.
“It doesn’t necessarily mean that it would be convertible into a significant equity stake in Dell,” Faber said.
We’ve reached out to Microsoft and Dell for comment, but given the nature of this deal, we don’t expect much of a response. Rumors of Dell going private have been floating around for some time now, but earlier this month they also managed to jump Dell’s stock by 13 percent.
From the scant details about Microsoft’s investment, it’s likely that discussions are still ongoing. Faber notes that the “outlook is fairly positive” that Microsoft will reach a deal with Dell, and it could be finalized by the end of the week.
Given Microsoft’s significant investment in Nokia to help make Windows Phone a success, it wouldn’t be surprising to see the company join forces with Dell. Windows 8 needs support from big players like Dell, and a (relatively) small investment like this could pay off for Microsoft down the line. Just look at how Microsoft’s $240 million investment in Facebook has helped it land significant deals like putting Bing searches within the social network.