Dell LBO, Hilton IPO redraw mega-deal map

Dell set to join list of largest deals after shareholder vote

Hilton IPO sets up exit for another ‘golden age’ LBO

First Data, Clear Channel remain private

The deal, which is set to close by the end of the year, will rank behind the $26.7 billion LBO for Hilton by Blackstone Group in Oct 2007, and ahead of the $23.2 billion Clear Channel Communications Inc acquisition by Bain Capital and Thomas H Lee in July, 2008. (See list)

The Dell deal is the second this year to change the ranking of top LBOs, most of which took place during the so-called golden age of private equity from 2005 to 2008.

Before Dell, the $28 billion LBO of HJ Heinz by Berkshire Hathaway and 3G Capital landed on the richest LBO list earlier this year as the first deal above $20 billion since the financial crisis.

Riding a rebound in the travel business, Blackstone Group is finally charting an exit for the renamed Hilton Worldwide Holdings Inc through a $1.3 billion initial public offering that’ll value the hotel chain at about $30 billion, including debt, according to a report by sister news service Reuters

That leaves just Energy Future Holdings, formerly TXU, First Data Corp and Clear Channel on the list of deals over $20 billion that remain private or unsold. Energy Future Holdings appears to be headed for bankruptcy as the company’s high debt payments and depressed energy prices have taken their toll on the $44.4 billion LBO, according to Moody’s.

Favorable credit conditions and bullish equity markets are fueling deal-making, but few in the industry expect a rash of mega-deals after Dell and Heinz. Both of those LBOs drew strength from two motivated billionaires: Michael Dell and Warren Buffett.

However, once Hilton finally goes public, some of the other LBOs on the list could see some kind of an exit, if the economic recovery continues.

Michael Dell has plenty of work ahead after a hard-fought battle with Carl Icahn to take his company private. In his first interview since completing the deal, Dell told CNBC the tech firm will focus on the next five-to-ten years, rather than the quarterly updates required from public companies.

Asked about the Twitter IPO and whether the company sees a role for itself in the area of mobile computing, Dell said he expects to grow through acquisitions to increase the company’s reach in providing servers, security and other backbone technology for cloud and mobile computing.

“Twitter is a great customer,” he said.

While Dell admitted the proxy fight by Icahn created some distraction, the Dell management team remained focused and grew its market share in enterprise solutions this year, he said.

“We’re playing offense, we’re on the attack, we’re expanding our share,” he said. “This is the Dell many of you are familiar with.”

Silver Lake, which will own a 25 percent stake in Dell after the deal closes, did not issue a statement after the Sept. 12 shareholder vote.

Dell’s pace of acquisitions will likely fall to $1 billion a year or less after a $12 billion shopping spree since 2010 as it grapples with its debt after its take-private deal, according to Moody’s.