Dell buyout deal is reportedly near

The specter of a privately held Dell(s dell) is starting to gel into reality, according to several press reports.

Microsoft CEO Steve Ballmer

Microsoft CEO Steve Ballmer

Citing unnamed sources, the Wall Street Journal reported that talks over the deal — at a price of about $13 or $14 per share  — continued into Sunday night. The Journal reiterated earlier reports that the buyout, worth about $22 billion, would be led by Silver Lake Partners, a private equity firm (and former employer of John Swainson, president of Dell’s Software unit) and Microsoft(s msft). Dell founder and CEO Michael Dell who owns 16 percent of the company, would keep a stake, the paper reported.
The prospect of Microsoft — which is a long-time Dell partner — holding sway over a major hardware player continues to raise eyebrows. Cozying up with one supplier — say Dell, over others such as HP(s hpq), Lenovo, Acer etc…. could obviously cause problems. But Microsoft appears to be losing leverage over its traditional PC partners, most of which could be counted on to pre-load Windows on virtually all of their laptops and desktops.
As a sign of changing times, HP on Monday announced its first Chromebook, a laptop that ships with Google’s Chrome OS(s goog), not Windows. Whether that is a reaction to all this Dell-Microsoft talk or was just an inevitable hedging of bets is unclear.
For its part, Dell, which is the third-largest PC maker, offers Project Sputnik, a developer-focused laptop preloaded with Ubuntu Linux, but all of its retail PCs ship with Windows, according to The NPD Group.
The Journal last week reported that Microsoft’s role in a new Dell was a bone of contention in the talks. It’s obvious that Microsoft would want to call the shots as to what software is loaded on Dell machines from laptops to servers.
DELL Chart

DELL data by YCharts

In a research report, Sanford Bernstein analyst Toni Sacconaghi said a deal could make sense given that Dell is relatively inexpensive; that private equity firms have a ton of cash to spend and that Michael Dell is a “committed partner” with incentives and a stake that would strongly align him with the interests of private equity buyers.
Still, people who have watched both companies for some time have a hard time envisioning Mr. Dell “working for” Microsoft CEO Steve Ballmer so if Dell does go private with Microsoft owning a significant share, stay tuned.
This story will be updated as new details emerge.