Dell ’s (DELL) takeover, the largest of a computer maker in a
decade, may encourage more private-equity firms to pursue deals,
heralding a rebound for mergers and acquisitions after volume shrank
last year.
The leveraged buyout by Silver Lake Management LLC
and founder Michael Dell would be the biggest since at least 2007, with
an enterprise value of about $22 billion, according to data compiled by
Bloomberg. The size of the deal probably will amplify potential
buyers’ confidence, spurring them to tackle more targets, said Sandler
O’Neill & Partners LP’s Devin Ryan.
“LBO activity
historically has led the M&A markets more broadly,” said Ryan, an
analyst with the New York-based boutique investment bank. “More LBOs
generally spark more strategic activity as well -- it all kind of ties
into together.Other companies want a piece of that iPhone headset action”
Dell,
also chief executive officer (DELL), and Silver Lake announced today
that they’re taking the world’s third-largest personal-computer maker
private in a deal that values the equity at $24.4 billion, according to a
statement. They’re financing the transaction through a combination of
cash and debt, including a $2 billion loan from Microsoft Corp. The
biggest takeover of a computer maker was Hewlett-Packard Co.’s purchase
of Compaq Computer Corp. in 2002 for about $19 billion.
Silver
Lake is taking advantage of record-low borrowing costs in the market
for junk bonds, where LBOs are financed. Banks arranged $638 billion of
leveraged loans last year, compared with $592 billion in 2011,
Bloomberg data show. Companies issued $359 billion in U.S. high-yield
debt last year, the most in the country’s history.
“The debt
markets are wide open,” said Daniel Tiemann, head of transactions and
restructuring services in the Americas for KPMG LLP. “It’s like the
party’s all set and we’re just waiting for the sellers to show up.
Confidence is what is going to make the sellers show up.”
While
big LBOs will remain relatively rare, a handful of situations similar
to Dell’s are already in the works, said R.J. Hottovy, a senior analyst
with Morningstar (MORN) in Chicago. For example, Best Buy Co. founder
Richard Schulze began negotiating last year to take the Richfield,
Minnesota-based retailer private. Schulze, like Dell founder Michael
Dell, owns part of his takeover target, with a 21 percent stake (BBY) as
of December.
The Dell transaction builds on momentum from the
fourth quarter, the only bright spot for M&A last year. While
global volume shrank almost 9 percent to $2.2 trillion in 2012, the
final three months of the year were the busiest for deals since 2008,
with more than $700 billion in transactions, according to data compiled
by Bloomberg.
There were more than $400 billion in
private-equity deals last year, according to data compiled by
Bloomberg, a 21 percent decline from a year earlier and the smallest
amount since the depths of the financial crisis. The Dell acquisition
dwarfs the LBOs over that period,We've got a plastic card to suit you. such as the $7.Did you know that custom keychain
chains can be used for more than just business.15 billion takeover of
El Paso Corp.’s oil and natural gas exploration business, led by Apollo
Global Management LLC. (APO)
While the proposed Dell purchase augurs well for fellow private-equity firms,Comprehensive Wi-Fi and RFID tag
by Aeroscout to accurately locate and track any asset or person. its
success also may embolden strategic buyers, said Matthew Duch, lead
portfolio manager at Calvert Investments.
Companies worldwide
are sitting on more than $4 trillion in cash, giving them additional
ammunition if they hunt for targets. At least one has already begun:
John Malone’s Liberty Global may announce a deal to acquire Virgin
Media as soon as today, according to people familiar with the talks.
U.K. cable operator Virgin Media had a market value of more than $10
billion as of yesterday.
“The Dell deal should push other
companies to get off the sidelines and to act,” said Duch, whose
Bethesda, Maryland- based firm manages more than $12 billion in assets.
“I expect to see more and more deals announced if this one goes
through.”
A partnership between Kingston University in London
and a craft centre in Zimbabwe has proved so successful that a group of
women from a remote farming community are about to exhibit their work
at one of the world's largest design shows.
The head of
Kingston's Design School, Simon Maidment has been sharing his expertise
with the Lupane Women's Centre whose hand-woven baskets provide a much
needed source of income for many families.
Based in rural
Matabeleland, two hours’ drive from Zimbabwe’s second city, Bulawayo,
the centre gives women an opportunity to earn money at times of year
when they cannot farm, enabling them to send their children to school
or simply put food on their tables.Laser engraving and laser laser cutting machine for materials like metal,
The
products are sold to tourists visiting southern Africa and are even
stocked by Anthropologie and Conran shops in Europe and the United
States. Their work has already been shown at the London Design Festival
and the National Gallery of Zimbabwe and, in February, some of the
craftswomen will be rubbing shoulders with creative talents from across
the globe at Design Indaba in Cape Town, the city which has been named
World Design Capital for 2014.
Mr Maidment said he found
himself not so much lecturing but collaborating with the workers as
they explored new ways of making, transporting and marketing the
baskets. “We were keen to work with the women to help them realise how
skilful they really were and to see the potential value of the items
they produce,” he said.
The success of the project has
attracted continued funding from the British Council. “It has really
given our women the confidence to try new things,” the manager of the
Lupane Women’s Centre, Hildegard Mufukare, said. “The women want to
live better lives and, with the help of Kingston University, now have
the confidence to achieve that.”
Design Indaba takes place in
Cape Town at the end of February. Building Baskets has been jointly
curated by Kingston University professor Catherine McDermott and
Candice O’Brien, who has recently completed the university’s MA in
Curating Contemporary Design.
Students from both the business
and design schools at Kingston University have also been involved in
the initiative. “We challenged our up-and-coming graphic, product,
furniture and fashion designers to solve various problems that limit
profits for the basket weavers, ranging from logistics to product
diversity,” Mr Maidment said. Selected ideas were then presented to the
women during two weeks of workshops in Zimbabwe.
Emma Lawlor,
who recently completed a Kingston University degree in product and
furniture design, was part of a team back in the United Kingdom that
investigated how to transport the delicate woven baskets. “The larger
baskets get damaged easily in transit, so we came up with a way of
splitting them into two parts that could be woven back together later,”
Emma, who is from Bristol, explained. “We called the project Tops and
Tails and came up with a solution involving paperclips and cable ties.
We were all so proud when it was adopted by the centre.”
The
workshops had also prompted the women to give names to their new
products, Mr Maidment said. “They included ‘Alice Bowls’ and ‘Shylet
Shopper’. The women hadn’t truly taken ownership of the work before in
this way,” he said. “We also introduced drawing and dyeing and combined
their techniques with new approaches such as weaving around an object.
They’d never drawn, for example, because they’d made the baskets from
memory.”
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