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Breaking News from CNBC's David Faber: Microsoft in Talks to Invest $1B-$3B As Part of Dell LBO

WHEN: Today, Tuesday, January 22nd

WHERE: CNBC's "Squawk on the Street"

Following is the unofficial transcript of breaking news from CNBC's David Faber. Additionally, here is a link to embeddable video: http://video.cnbc.com/gallery/?video=3000142830.

All references must be sourced to CNBC.

CARL QUINTANILLA: DAVID FABER HAS MADE HIS WAY ON SET AND THAT CAN ONLY MEAN ONE THING. DAVID?

DAVID FABER: YES, AT THIS TIME, CARL THAT'S RIGHT, WE'VE GOT A LITTLE BREAKING NEWS HERE REGARDING THAT DELL LEVERAGE BUYOUT. WHAT WE CAN TELL YOU AT THIS POINT IS AN UNEXPECTED STRATEGIC INVESTOR IN THE FORM OF MICROSOFT HAS SHOWN UP AT THE TABLE AND IS IN TALKS IN FACT WITH SILVERLAKE, THE MAIN SPONSOR BEHIND THIS LEVERAGE BUYOUT AND MICHAEL DELL AS WELL OF COURSE, BEING AGAIN ONE OF THE ENGINES BEHIND IT. TO INVEST BETWEEN ONE AND THREE BILLION DOLLARS IN WHAT I AM BEING TOLD BY PEOPLE CLOSE TO THE SITUATION WOULD ESSENTIALLY BE A MEZZANINE FINANCING. MOST LIKELY TAKING THE FORM OF A PREFERRED OF SOME KIND. DOESN'T NECESSARILY MEAN IT WOULD BE CONVERTIBLE INTO A SIGNIFICANT EQUITIES STAKE IN DELL, BUT IT IS OF COURSE A SIZABLE POTENTIAL INVESTMENT AGAIN BETWEEN ONE AND THREE BILLION DOLLARS IS AT LEAST WHAT I'M HEARING AT THIS POINT. AND OF COURSE, YOU UNDERSTAND IT IN SOME WAYS, GIVEN MICROSOFT IS VERY CLOSELY LINKED WITH DELL – CERTAINLY THE SALE OF ITS PRODUCT IS VERY CLOSELY LINKED WITH THE SALE OF DELL'S MAIN PRODUCT, THAT BEING THE PERSONAL COMPUTER. NOW AS FOR THE TALKS OVERALL, BETWEEN SILVERLAKE, MICHAEL DELL AND THE SPECIAL COMMITTEE FOR DELL AND DELL SHAREHOLDERS, THOSE TALKS I AM TOLD CONTINUE. THERE IS HOPE THAT A DEAL PERHAPS WILL BE REACHED AS SOON AS THE END OF THIS WEEK, BUT AS YOU MIGHT EXPECT, AND AS OFTEN THE CASE IN SITUATIONS LIKE THIS, NOT ONLY ARE THEY ARE GOING TO BE CROSSING OFF AND CHECKING OFF EVERY BOX IN TERMS OF DEALING AS APPROPRIATELY AS THEY CAN, WITH A SITUATION HAS ADHERENT CONFLICTS IN IT. BUT THEY ARE ALSO NEGOTIATING PRICE STILL. NOW, LAST WEEK WE TOLD YOU BETWEEN 13 AND 14 DOLLARS A SHARE WAS AT LEAST THE POTENTIAL PRICE RANGE HERE, THAT I WAS HEARING FROM MY SOURCES. THAT CONTINUES TO BE THE CASE. WHERE IT ULTIMATELY LANDS OUT, HARD TO SAY AT THIS POINT, BUT NO REAL CHANGE AT LEAST IN TERMS OF THAT TALK EXCEPT THAT OF COURSE IT DOES TAKE TIME TO GET EVERYBODY TO AGREE TO A PRICE. BUT THOSE TALKS STILL GOING ON CARL. BUT THE MICROSOFT PART OF THIS IS OF COURSE A SIGNIFICANT ONE. MICROSOFT NOT A STRANGER TO HAVING MADE INVESTMENTS IN THE PAST. GARY KAMINSKY REMINDING ME THAT THEY INVESTED IN APPLE MANY YEARS AGO AT THE BOTTOM. THEY MADE A HUGE INVESTMENT IN COMCAST YEARS AGO AND SO THEY ARE OCCASIONALLY TAKEN TO USING PART OF THAT ENORMOUS CASH PILE TO MAKE THESE STRATEGIC INVESTMENTS. AGAIN IT DOESN'T MEAN THAT MICROSOFT WILL END UP WITH SIGNIFICANT EQUITY STAKE IN WHAT IS A PRIVATE DELL, BUT IT CERTAINLY HAS A LOT AT STAKE TO MAKE SURE THAT COMPANY DOES WELL BECAUSE OF COURSE IT SELLS AN AWFUL LOT OF SOFTWARE INTO THOSE COMPUTERS.


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