March 6, 2021

HP Slams $24.4 Billion Dell Private Equity Deal

Hewlett-Packard (NYSE:HPQ) Tuesday slammed Dell (NSDQ:Dell)’s $24.4 billion private equity deal, charging that the “significant debt load” will hurt its rival’s ability to “invest in new products and services.”


“Dell has a very tough road ahead,” HP said in an unattributed statement sent to the press. “The company faces an extended period of uncertainty and transition that will not be good for its customers. And with a significant debt load, Dell’s ability to invest in new products and services will be extremely limited. Leveraged buyouts tend to leave existing customers and innovation at the curb. We believe Dell’s customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity.”

HP would not comment on when or whether the company would offer any competitive swap-outs or financial incentives to get partners or customers to replace Dell gear.

Dell Tuesday reached an agreement with private equity firm Silver Lake Partners and other financing companies to go private through a leveraged buyout at $13.65 per share, or $24.4 billion. The deal includes a $2 billion loan from software giant Microsoft along with cash from Silver Lake, MSD Capital and additional financing from BofA Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets.

Several solution providers said they see the Dell private equity deal accelerating Dell’s ability to innovate as it sharpens its focus as the enterprise market.

“I believe that [Dell CEO] Michael Dell’s leveraged buyout is going to allow for more innovation in its product sets,” said Bob Venero, CEO of Future Tech, a Holbrook, N.Y.-based Dell and HP partner. “Michael wants to innovate. He has shown that and proven that. This is going to allow him to innovate more rapidly without the public scrutiny.”

Peter Estes, president and co-founder of Axis Business Solutions, a Dell and HP partner based in Portsmouth, N.H., said in an email to CRN that HP’s statement is “predictable but off the mark.”

“Many clients we work with have become disenchanted with slow-moving manufacturers, and Dell has a real chance to differentiate themselves,” said Estes. “A private Dell will be more nimble and this will give them the ability to get to market faster with new additions to their best-in-class solutions suite. If Dell can expand its suite of solutions, this will only help our consultants and engineers to better serve our customers. I also believe that this expansion will result in local companies having a strong desire to look to larger local Dell partners like Axis to help them design and implement new solutions.”