A Deal for Dell

A deal for Dell is almost here. In what would be the biggest buyout since the financial crisis, Dell was close to an agreement to sell itself to a consortium of its founder, Microsoft and the private equity firm Silver Lake for more than $23 billion, people briefed on the matter told DealBook’s Michael J. de la Merced.

The final details were being worked out on Monday, and an agreement could be announced as soon as Tuesday, although the talks could still collapse, the people briefed on the matter said. The investors are expected to pay $13.50 to $13.75 a share, with Michael S. Dell, the founder, contributing his nearly 16 percent stake to the deal, worth about $3.8 billion under the current terms. Silver Lake would likely contribute about $1 billion, and Microsoft is expected to put in about $2 billion in the form of preferred shares or debt, the people added. Dell may also bring home some of its offshore cash to help finance the deal.

“The question will now turn to whether taking the personal computer maker private will accomplish what years of previous turnaround efforts have not,” Mr. de la Merced writes. “Mr. Dell has sought to move the company into the more lucrative and stable business of providing corporations with software services, spending billions of dollars on acquisitions to lead that transformation. The aim is to refashion Dell into something more like I.B.M. or Oracle. Even so, manufacturing PCs still makes up half of the company’s business.”

LIBERTY GLOBAL IN TALKS TO BUY VIRGIN MEDIA  |  Liberty Global, the cable company owned by the American billionaire John C. Malone, is in talks to buy Virgin Media, the British company said on Tuesday. Shares in Virgin Media rose almost 15 percent in early trading in London on Tuesday. The company’s enterprise value is around $19.4 billion according to data from Thomson Reuters. “The British company, whose primary listing is on Nasdaq, is the second-largest pay-TV provider in Britain after BSkyB, which is partly owned by Rupert Murdoch’s News Corporation. A potential deal for Virgin Media would put Mr. Malone head-to-head with Mr. Murdoch, his longtime rival,” DealBook’s Mark Scott writes.

U.S. ACCUSES S.&P. OF FRAUD  |  The Justice Department on Monday filed civil charges against Standard & Poor’s, the nation’s biggest credit-rating agency, accusing it of inflating the ratings of mortgage investments. “The suit, filed in federal court in Los Angeles, is the first significant federal action against the ratings industry, which during the boom years reaped record profits as it bestowed gilt-edged ratings on complex bundles of home loans that quickly went sour,” Andrew Ross Sorkin and Mary Williams Walsh write in DealBook. More than a dozen state prosecutors are expected to join the federal suit, and New York’s attorney general is readying a separate action.

S.&P. “knowingly and with the intent to defraud, devised, participated in, and executed a scheme to defraud investors” in mortgage-related securities from September 2004 through October 2007, according to the suit filed against the company and its parent, McGraw-Hill Companies. The credit-rating agency also falsely represented that its ratings “were objective, independent, uninfluenced by any conflicts of interest,” the suit claimed. S.&P., for its part, said it had acted in good faith. “A D.O.J. lawsuit would be entirely without factual or legal merit,” the company said, adding that its competitors had given the same ratings to the securities believed to be in question.

“Settlement talks between S.&P. and the Justice Department broke down in the last two weeks after prosecutors sought a penalty in excess of $1 billion and insisted that the company admit wrongdoing, several people with knowledge of the talks said,” Mr. Sorkin and Ms. Walsh write. “That amount would wipe out the profits of McGraw-Hill for an entire year. S.&P. had proposed a settlement of around $100 million, the people said. S.&P. also sought a deal that would allow it to neither admit nor deny guilt; the government pressed for an admission of guilt to at least one count of fraud, said the people. S.&P. told prosecutors it could not admit guilt without exposing itself to liability in a multitude of civil cases.”

McGraw-Hill’s stock tumbled almost 14 percent on Monday, to close at $50.30 a share.

HERBALIFE’S ELUSIVE SALES DATA  |  The hedge fund manager William A. Ackman has clashed with another big investor, Daniel S. Loeb, over whether the nutritional supplements company Herbalife is a pyramid scheme. Regulators scrutinizing the company will have an interesting problem, DealBook’s Peter Eavis writes. “The public numbers do not provide a clear picture of who buys Herbalife products — and why. So-called direct-sales companies like Herbalife operate in an accounting gray area that allows them to book goods bought by its network of sales representatives as revenue. Most traditional retailers record sales when a customer buys something. The uncertainty has left shares of Herbalife vulnerable to wild swings in recent months.”

Herbalife claims it is a strong company, but it is hard to discern the underlying demand. “The company doesn’t specify how many of those products are eventually sold to customers outside the sales network. Nor does it detail how many products are consumed by members of its network.”

One former saleswoman for Herbalife, Ana Arias, of Scottsdale, Ariz., is considering legal action against the company, estimating she lost $210,000 after three years in the company’s network. “They want to make people believe there is this long line of consumers,” she said. “I realized it was going to go nowhere.”

ON THE AGENDA  |  The Commodity Futures Trading Commission holds a daylong public meeting starting at 9:30 a.m. on proposed rules to protect client funds held by futures commission merchants and derivatives clearing organizations. NYSE Euronext, BP and Sirius XM Radio report earnings on Tuesday morning. Zynga announces results in the evening. The ISM nonmanufacturing survey for January is out at 10 a.m. Apple releases its newest version of the iPad.

BRIDGEWATER SAID TO PLAN NEW FUND  |  Bridgewater Associates, the world’s largest hedge fund firm, has told investors it will start a new fund this year, to help make sure another fund does not get too big, The Wall Street Journal reports. The new fund, All Weather Major Markets, was described as a variation of its All Weather strategy, which returned 15.3 percent in 2012, gross of fees, according to the newspaper. The firm also said it had sold a minority equity stake to an outside investor whom it did not identify, the newspaper says. Last year, the Teacher Retirement System of Texas bought a $250 million stake in Bridgewater.