Is Microsoft Investing Up To $3B In Dell Buyout?


Could Microsoft be in talks to invest up to $3 billion in PC partner Dell?

According to a report by CNBC, Microsoft is a possible "mezzanine" -- or preferred financing partner -- for between $1 billion and $3 billion in Dell's reported interest in a leveraged buyout.

Dell has had discussions with several financing organizations about going private, a move that could require up to $20 billion, according to reports.

[Related: Ex-Microsoft SVP's New Book: Ballmer Squashes Potential CEO Candidates]

Dell's stock jumped to $13 to $14 per share on Jan. 14 when the initial reports of a possible buyout emerged. On Tuesday Dell shares were up again, rising 23 cents, or 1.8 percent, to $13.07. Microsoft shares, meanwhile, were down 12 cents, or 0.5 percent, to $27.13.

Mezzanine capital typically refers to a preferred equity that is structured either as a loan or preferred stock if the debt is not repaid within a certain period of time.

Reports about a Dell buyout have centered around Silver Lake, a private equity firm, but it is believed that other financing would be necessary to build the near-$20 billion that it could required to take the company private.

Microsoft has invested in other tech companies in the past, including Facebook and Apple.

PUBLISHED JAN. 22, 2013