Michael Dell's plan to take his computer company Dell private may hinge partly on whether he can exploit one of its most valuable assets: up to $14.2 billion in cash and bonds outside the U.S.
Like many large technology firms, Dell has legally avoided billions in taxes by attributing profits to overseas subsidiaries in tax havens. Bringing the cash back to the U.S. to finance the buyout would risk subjecting it to the 35 percent corporate income tax rate, with a credit for any foreign income tax already paid."You can be sure the buyout team is looking at the most effective way that asset can be used," said Antony Page, a professor at Indiana University's School of Law. "There may be loopholes in there that sophisticated tax lawyers can find that aren't immediately obvious."A group including Michael Dell and private equity firm Silver Lake Management is in talks with banks to raise the cash for a leveraged buyout of the Round Rock-based company, sources told Bloomberg. Michael Dell, 47, is the company's founder, chairman and chief executive officer, and he owns about 15.7 percent of the stock, according to data compiled by Bloomberg. A Dell spokesman declined to comment.With Dell's market capitalization at $22.3 billion, it would constitute the largest leveraged buyout since 2007."Substantially all" of the computer maker's $14.2 billion in cash and investments were outside the U.S. as of Sept. 30, according to a regulatory filing. Dell also had about $9 billion in short- and long-term debt as of Sept. 30.Over the years, companies have employed techniques for bringing cash back while still avoiding the tax hit.Have more to add? News tip? Tell us
