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Silver Lake Explored Sale of Dell's PC Business Ahead of EMC Deal

Nobody wanted it.

Justin Sullivan / Getty

Private equity firm Silver Lake, co-owners of Dell, last week approached Hewlett-Packard, Lenovo and Huawei to explore the possibility of selling off Dell’s personal computing business, sources familiar with the matter told Re/code.

But by Monday, Dell proposed to pay a combined $67 billion to acquire the data storage company EMC and its subsidiary VMware in what is the largest proposed technology M&A deal in history.

It was not immediately clear if Silver Lake acted alone or if Dell was consulted. It is also unclear if Silver Lake or Dell would continue to explore a sale at this point.

The approach comes as the once thriving PC industry grapples with declining sales. That’s partially why none of the parties that were approached engaged further. Nearly half of Dell’s annual revenue come from the PC business, or about $27 billion, according to estimates by Goldman Sachs.

It was not known how much Silver Lake was seeking, but the sale price would probably amount to just a fraction of annual revenue, which is tricky to gauge because Dell no longer publishes its financial data. When HP first floated the idea of spinning off its PC division in 2011, analysts estimated its valuation at about half annual sales, and the valuation would likely only be lower four years later. At a diminished rate today, Silver Lake may have been seeking about $8 billion or a third of the Dell PC business’s annual sales.

None of the companies were interested, the sources said. HP was not interested, according to one source, because it is in the process of splitting into two companies, one devoted to PCs and printer sales, the other to corporate computing hardware and services. Lenovo concluded that an acquisition of Dell’s PC business wouldn’t pass muster with regulators in the U.S. Huawei isn’t in the PC business and has made public that it has no intentions to enter it.

Silver Lake helped finance the $25 billion leveraged buyout of Dell in 2013. Dell’s board of directors consists of three members: Founder and CEO Michael Dell, Silver Lake Managing Partners Egon Durgan and Simon Patterson.

Representatives of Silver Lake, Dell, HP and Lenovo declined to comment. Huawei did not immediately return messages seeking comment.

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