Dell founder ready to explore deal options with Blackstone and Icahn

Dell’s largest independent shareholder, Southeastern Asset Management, has told the computer maker that a $24.4 billion buyout bid undervalues it, adding to a chorus of investor dissatisfaction with the landmark deal to take it private.

Dell’s largest independent shareholder, Southeastern Asset Management, has told the computer maker that a $24.4 billion buyout bid undervalues it, adding to a chorus of investor dissatisfaction with the landmark deal to take it private.

 


Michael Dell has said he is willing to “explore in good faith” the possibility of working with Blackstone or Carl Icahn, which have made rival offers for Dell to the $24.4 billion approach from himself and Silver Lake Partners.

The computer maker’s special committee said it had not yet determined whether Blackstone’s offer of at least $14.25 a share for the whole company, or Mr Icahn’s $15 a share for 58 per cent, constituted a superior proposal. Both exceed the $13.65-a-share offer from Mr Dell and Silver Lake on a per share basis, but each comes with caveats that could complicate a deal.

The committee gave no timetable for a decision, a move that would invite a formal bid. Meanwhile, the deal with Mr Dell and Silver Lake stands.

Blackstone and Mr Icahn sent letters to the committee over the weekend, as a “go-shop” period meant to attract other bids expired. Dell’s special committee released the letters from Blackstone and Mr Icahn.

Blackstone has proposed offering at least $14.25 a share for Dell, while also allowing a so-called “public stub” to remain trading on the Nasdaq.

Blackstone said Morgan Stanley had provided it with a “highly confident” letter regarding financing such a transaction. It also invited Mr Dell to roll over his 16 per cent stake to retain a holding under its deal. Blackstone is working with technology investment groups Insight Venture Partners and Francisco Partners.

Mr Icahn said he was prepared to buy 58 per cent of the company for $15 a share, a scenario also involving a public stub. Funding would come from a $5 billion equity commitment in Dell – a mix of his own money, his firm’s capital and Dell shares he already owns – and another $7.4 billion of cash on Dell’s books and $7 billion in debt.
– (Copyright The Financial Times Limited 2013)