Blackstone Group, Carl Icahn table competing offers for Dell Inc
25 March 2013
Michael Dell's plan to take Dell Inc private has now hit a roadblock after private equity firm Blackstone Group and activist investor Carl Icahn submitted competing buyout offers.
Dell's special committee, which was formed to flush out superior bids, said that it is yet to determine whether Blackstone's $14.25 a share offer for the whole company, or Icahn's $15 per share bid for 58 per cent of the company, constituted a superior proposal to the $13.65-a-share offer from Michael Dell and Silver Lake Partners.
The special committee said Michael Dell is willing to work with third parties on alternate proposals.
''We intend to work diligently with all three potential acquirers to ensure the best possible outcome for Dell shareholders, whichever transaction that may be,'' said Alex Mandl, special committee chairman, in a statement.
Both the bids, in the form of letters, were submitted over the weekend, the day the ''go-shop'' period was set to expire.
Both the bids appear to be interesting since Blackstone's and Icahn's proposals allow a portion of Dell's stock to be publicly traded, a move that will find favour with two of Dell's largest institutional share holders like Southeastern Asset Management and T Rowe Price that have opposed Micheal Dell's offer and are on record saying that they wish to continue as investors in Dell.
Michael Dell and Silver Lake had, on 5 February, offered to take Dell private for $13.65-a-share or $24.4 billion. Their offer requires the approval of a majority of shareholders, excluding Michael Dell, who is contributing his 15.6 per cent stake to the new company.
Some of Dell's large institutional shareholders have opposed the deal saying the offer ''grossly undervalues the company.''
Under Blackstone's interim offer, the world's largest private equity firm is looking at having some of the stock publicly traded, but is willing to buy out any shareholder that wants to sell, while under Icahn's offer, Dell shareholders will have cash or stock option, with a cap on the cash component.
Icahn, who holds $1 billion worth of stock in Dell, will buy only 58 per cent of the company shares, and allow the remaining 42 per cent to continue to be publicly traded.
With the two competing bids now on the table, Dell's special committee must now decide whether to invite Blackstone and/or Icahn to make formal bids.