Updated to reflect Moody's bond rating downgrade
NEW YORK ( TheStreet) -- Beleaguered PC maker Dell (DELL) reached a deal to be taken private by company founder Michael Dell and investors that include software maker Microsoft (MSFT) and private equity firm Silver Lake Partners.
The takeover is noteworthy because Dell's namesake is raising his bet on a turnaround of the world's third-largest PC maker with a controlling stake in the buyout, as the company shifts into IT services, analytics and software businesses that could put it in closer competition with IBM (IBM), Oracle (ORCL) and Cisco (CSCO).
The $24.4 billion price for Dell also amounts to the largest leveraged buyout since the financial crisis and, in fact, stands as one of the biggest private equity deals of all time. As such, Dell's takeover may be a strong indicator of growing animal spirits on Wall Street after the Dow Jones Industrial Average closed Monday near 14,000 and within reach of record highs.Still, Dell's buyout and the reported $15 billion in debt needed to pay for the company may actually hurt its transition from PCs to tech services, instead of providing a buffer from shareholders. The deal, in that sense, may raise questions about whether M&A markets and a surge in stocks augur well for economic growth. Notably, Dell's takeover raises one crucial concern: Is this what Federal Reserve Chair Ben Bernanke wanted? Technically, Michael Dell's fortune, Microsoft, Silver Lake and investment banks Barclays (BCS), Bank of America Merrill Lynch (BAC), Credit Suisse (CS) and RBC (RBC) are financing the $24.4 billion takeover. But, in reality, the deal also is being financed by the Federal Reserve, by way of easing policies that put most interest rates, including those of risky debts, near record lows.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV