How Does Microsoft Fit Into Dell's $24.4 Billion Buyout?

Paul Lilly

Microsoft's $2 billion loan helped Michael Dell and partners purchase Dell for $24.4 billion.

First things first -- if you haven't heard by now, Dell is going private . Michael Dell, with the help of private equity firm Silver Lake and a significant loan from Microsoft , have agreed to pay Dell's public shareholders $13.65 a share, valuing the transaction at $24.4 billion. Now Mr. Dell is free to run the company without having to answer to shareholders, and while it will likely be years before we know if this was in the best interest of Dell , there's an interesting side story involving Microsoft that deserves attention.

Without Microsoft's $2 billion loan, either this deal doesn't go down, or another company with that kind of cash to spend steps in. What's Microsoft's play in all this?

"Microsoft has provided a $2 billion loan to the group that has proposed to take Dell private. Microsoft is committed to the long term success of the entire PC ecosystem and invests heavily in a variety of ways to build that ecosystem for the future," Microsoft said in a statement .

"We're in an industry that is constantly evolving. As always, we will continue to look for opportunities to support partners who are committed to innovating and driving business for their devices and services built on the Microsoft platform," the company added.

So there's Microsoft's official explanation on why it got involved to the tune of $2 billion. As far as what it's willing to admit, Microsoft's play is that it has an obvious vested interest in the PC ecosystem, and apparently it believes, as Michael Dell does, that taking Dell private is the right move at this time.

That's a tough pill for shareholders banking on a long-term return to their investment, especially ones who purchased stock back when it was trading at around $25 (you have to go back to 2008). They've seen their investment trickle downwards ever since, and are now being told it's game over, here's your money and thanks for the pie.

Getting back to Microsoft, the general consensus is that Microsoft won't try and do anything drastic, like hand over its Surface hardware to Dell.

"I don't think there's any chance of Microsoft turning Surface or anything about the Surface over to Dell," Stephen Baker, NPD's vice president of industry analysis, told PCWorld . "In the end, this is something Microsoft feels it needs to do under its own brand. Surface isn't just a device, it's also an understanding of consumer preferences, and how end users want their hardware to interact with their software."

What's also interesting is the parallel with Nokia. Two years ago, Microsoft invested billions of dollars in Nokia to help keep the company afloat, and now the two are BFFs in the mobile space. As ZDNet points out , Microsoft needed a partner to go all-in with its Windows Phone platform. One could speculate that Microsoft's looking for a similar commitment to Windows 8, especially since it's unhappy with the way OEMs have handled the OS's launch. Throw in the fact that HP is now selling Chromebooks, and perhaps there's even a bit of paranoia at play.

Yet another reason, proposed by T he Wall Street Journal , is that Microsoft wants to wedge itself deeper into corporate computing systems. The two partners could bundle enterprise services like data center and IT services, or customer relationship management software, giving Microsoft a bigger presence in IT, WSJ says.

Do you think Microsoft has a play beyond its official statement? Sound off in the comments section below!

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