December 13, 2019

DealBook: Microsoft May Back Dell Buyout

A Dell Sx2210t touch monitor running Windows 7 in 2009.Shannon Stapleton/ReutersA Dell Sx2210t touch monitor running Windows 7 in 2009.

The effort to take Dell private has gained a prominent, if unusual, backer: Microsoft.

The software giant is in talks to help finance a takeover bid for Dell that would exceed $20 billion, a person briefed on the matter said on Tuesday. Microsoft is expected to contribute up to several billion dollars.

An investment by Microsoft — if it comes to pass — could be enough to push a leveraged buyout of the struggling computer maker over the goal line. Silver Lake, the private equity firm spearheading the takeover talks, has been seeking a deep-pocketed investor to join the effort. And Microsoft, which has not yet made a commitment, has more than $66 billion in cash on hand.

Microsoft and Silver Lake, a prominent investor in technology companies, are no strangers. The private equity firm was part of a consortium that sold Skype, the online video-chatting pioneer, to Microsoft for $8.5 billion nearly two years ago. And the two companies had discussed teaming up to make an investment in Yahoo in late 2011, before Yahoo decided against selling a minority stake in itself.

A vibrant Dell is an important part of Microsoft’s plans to make Windows more relevant for the tablet era, when more and more devices come with touch screens. Dell has been one of the most visible supporters of Windows 8 in its products.

That has been crucial at a time when Microsoft’s relationships with many PC makers have grown strained because of the company’s move into making computer hardware with its Surface family of tablets.

Frank Shaw, a spokesman for Microsoft, declined to comment.

If completed, a buyout of Dell would be the largest leveraged buyout since the financial crisis, reaching levels unseen since the takeovers of Hilton Hotels and the Texas energy giant TXU. Such a deal is taking advantage of Dell’s still-low stock price and the abundance of investors willing to buy up the debt issued as part of a transaction to take the company private. And Silver Lake has been working with Dell’s founder, Michael S. Dell, who is expected to contribute his nearly 16 percent stake in the company to a takeover bid.

Yet while many aspects of the potential deal have fallen into place, including a potential price of up to around $14 a share, talks between Dell and its potential buyers may still fall apart.

Shares of Dell closed up 2.2 percent on Tuesday, at $13.12. They began rising after CNBC reported Microsoft’s potential involvement in a leveraged buyout. Microsoft shares slipped 0.4 percent, to $27.15.

Dell’s founder, Michael S. Dell, attended the unveiling of Microsoft’s Windows 8 operating system last year in New York.Lucas Jackson/ReutersDell’s founder, Michael S. Dell, attended the unveiling of Microsoft’s Windows 8 operating system last year in New York.

Microsoft’s lending a hand to Dell could make sense at a time when the PC industry is facing some of the biggest challenges in its history. Dell is one of Microsoft’s most significant, longest-lasting partners in the PC business and among the most committed to creating machines that run Windows, the operating system that is the foundation of much of Microsoft’s profits.

But PC sales were in a slump for most of last year, as consumers diverted their spending to other types of devices like tablets and smartphones. Dell, the third-biggest maker of PCs in the world, recorded a 21 percent decline in shipments of PCs during the fourth quarter of last year from the same period in 2011, according to IDC.

In a joint interview in November, Mr. Dell and Steven A. Ballmer, Microsoft’s chief executive, exchanged friendly banter, as one would expect of two men who have been in business together for decades.

Mr. Dell said Mr. Ballmer had gone out of his way to reassure him that Microsoft’s Surface computers would not hurt Dell sales.

“We’ve never sold all the PCs in the world,” said Mr. Dell, sitting in a New York hotel room brimming with new Windows 8 computers made by his company. “As I’ve understood Steve’s plans here, if Surface helps Windows 8 succeed, that’s going to be good for Windows, good for Dell and good for our customers. We’re just fine with all that.”

Microsoft has been willing to open its purse strings in the past to help close partners. Last April, Microsoft committed to invest more than $600 million in Barnes Noble’s electronic books subsidiary, in a deal that ensures a source of electronic books for Windows devices. Microsoft also agreed in 2011 to provide the Finnish cellphone maker Nokia billions of dollars’ worth of various forms of support, including marketing and research and development assistance, in exchange for Nokia’s adopting Microsoft’s Windows Phone operating system.

Article source: http://dealbook.nytimes.com/2013/01/22/microsoft-may-back-dell-buyout/?partner=rss&emc=rss

DealBook: Clayton, Dubilier & Rice to Buy David’s Bridal

Dan Rentillo, design director for David's Bridal, in the company's studio in Manhattan in 2011.Ángel Franco/The New York TimesDan Rentillo, design director for David’s Bridal, in the company’s studio in Manhattan in 2011.

Love is in the air.

On Tuesday, the private equity firm Clayton, Dubilier Rice agreed to buy David’s Bridal in a deal that values the retailer at $1.05 billion.

“David’s Bridal is a unique and well-positioned specialty retailer competing in a large and stable industry,” Richard J. Schnall, a partner at Clayton Dubilier, said in a statement on Monday. “We look forward to working closely with the company to build on its market leadership and scale advantages to grow in new market segments, channels and geographies.”

The buyout of the bridal gown retailer is the latest industry buyout, as private equity firms hunt for turnaround plays.

The owners of David’s Bridal, Leonard Green and TPG Capital, began shopping the company to other private equity firms this summer. Despite its broad reach — it has about 300 stores in the United States and Canada — the retailer has been bogged down by concerns about its ability to compete against new entrants and the increase of consumers looking for higher-priced gowns.

The company, which has a partnership with Vera Wang, sells gowns that range from $99 to $1,500. But the bulk of its collection is in the middle of the range.

For Leonard Green and TPG, the deal represents a modest premium. The buyout firms bought David’s Bridal in 2007 from Federated Department Stores for $750 million. Leonard Green will maintain a minority stake.

The retail industry has been a popular hunting ground for private equity firms. Last year, BJ’s Wholesale Club agreed to a $2.8 billion buyout from Leonard Green and CVC Capital Partners. And in June, Thomas H. Lee Partners agreed to buy a majority stake in Party City, in a deal that valued the party supply retailer at $2.69 billion.

Article source: http://dealbook.nytimes.com/2012/08/28/clayton-dubilier-rice-agree-to-buy-davids-bridal/?partner=rss&emc=rss

DealBook: Liz Claiborne Sells Namesake Brand, Monet to J.C. Penney

William L. McComb, left, the chief of Liz Claiborne, at Juicy Couture's promotion for Fashion's Night Out in 2009.Lisa Lake/Getty Images for Juicy CoutureWilliam L. McComb, left, the chief of Liz Claiborne, at Juicy Couture’s promotion for Fashion’s Night Out in 2009.

Liz Claiborne continues to clean out its closet of brands.

The women’s apparel maker on Wednesday announced the sale of its namesake brand and Monet to J.C. Penney, with Bluestar Alliance buying Kensie. The transactions, along with the recent sale of its Dana Buchman brand to department store Kohl’s, will generate $328 million in cash proceeds, the company said.

“Over the past few years, we have worked diligently to turn this into a more efficient, dynamic, brand-centric, retail-based company, and today marks the culmination of these efforts,” William L. McComb, the head of Liz Claiborne, said in a statement. “At the close of these transactions, at a time when most economists in the world are now agreeing that major European and the U.S. markets are facing significant risks of another recession, we will be a more appropriately levered, more capital efficient, growth-oriented company.”

Liz Claiborne has been on a campaign to shed its brands and licenses in an effort to cut its debt load.

In August, the company sold a group of fragrance licenses to Elizabeth Arden for $58.4 million. Then in September, it offloaded Mexx, a young women’s apparel brand, to a joint venture led by buyout firm the Gores Group. Under the terms of the sale, Liz Claiborne received $85 million and a minority stake in the joint venture. On Wednesday, the company also announced that it has terminated its licensing agreements with Donna Karan International, one year early. The recent string of transactions is expected to reduce its debt to $270 to $290 million by the end of this year, the company noted in its statement.

With the loss of its namesake brand, the retailer also said it will rebrand itself with a new corporate name that reflects its remaining, flagship brands: Juicy Couture, Lucky Brand and kate spade. The trio, a group of labels focused on young women’s fashion, have been strong performers for Liz Claiborne’s portfolio. Though Juicy Couture noticed a small dip in same-store sales in September, Lucky Brand recorded a 24 percent increase; sales at kate spade, which caters to a wealthier demographic, more than doubled, gaining 114 percent. The company hasn’t not announced a new name.

Article source: http://feeds.nytimes.com/click.phdo?i=8042cc22e505ad48a6500a4e587572a3