Monday, May 20, 2024

Blackstone Drops Bid for Dell

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Less than a month after submitting a bid to buy PC maker Dell, Blackstone Group says it is no longer interested in purchasing the company. That leaves two bids for Dell on the table—one from company founder Michael Dell and one from investor Carl Icahn.

The Associated Press reported, “Dell says buyout specialist Blackstone Group is ending a bid to buy the computer maker, less than a month after pitching a plan to trump an offer from the company’s CEO and founder. A letter to Dell from Blackstone and others involved in the bid says a steep slump in PC shipments and Dell’s eroding financial profile prompted them to end their bid. The letter notes that PC shipments plunged 14% in the first quarter, and Dell has lowered its operating income forecast since the bid was submitted.”

According to The Wall Street Journal’s Sharon Terlep, David Benoit and Shira Ovide, “The Blackstone team was in Texas last week conducting due diligence on the company, and its review raised doubts about the future of Dell’s PC business, said people familiar with the matter. Blackstone had been studying ways to free up Dell cash that is held abroad without incurring a multibillion-dollar tax bill, according to a person familiar with the company’s thinking. It isn’t clear if this issue also factored into Blackstone’s decision.”

Computerworld’s John Ribeiro explained, “Blackstone in tandem with Francisco Partners and Insight Venture Management said in March they were prepared to enter into a definitive agreement to acquire Dell. Shareholders who wished to receive cash would receive more than US$14.25 in cash per share for all of their shares, while shareholders who wished stay invested in the company would have the opportunity to remain as shareholders and receive shares (subject to a cap) valued in excess of $14.25. The shares would continue to be publicly traded on Nasdaq. The offer was claimed to be a superior proposal to the $13.65 cash purchase price agreed to in the proposal by Michael Dell and Silver Lake. Dell shares closed Thursday at $13.95, valuing the group at $24.4 billion.”

Forbes noted, “Blackstone’s withdrawal leaves a $13.65 a share bid for Dell by Silver Lake Partners and founder Michael Dell, as well as a $15 a share proposal for a controlling stake in Dell floated by activist investor Carl Icahn, with both offers running a close contest. On Tuesday, Icahn reached a standstill with Dell that will cap his holding in the computer giant to 10% as he seeks support for his offer, which would keep Dell as a publicly traded company.”

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