Dell receives two 'possibly superior' bids from Icahn, Blackstone

By on March 25, 2013, 11:30 AM

Last month, Dell officially announced plans to go off the publicly-traded stock market and into private hands. The buyout offer came from founder Michael Dell himself and a handful of investment firms to the tune of $24.4 billion, or about $13.65 per share. But now two alternative takeover proposals have surfaced: one from activist investor Carl Icahn and the other from a private-equity fund managed by Blackstone Group LP.

Both offers are higher than the original $13.65 per share bid, too. Blackstone says its offer would value Dell in excess of $14.25 per share, while Icahn values his offer at $15 a share. The key difference is that either offer requires a public equity stub -- meaning some shares would remain public -- so despite paying more per share they are not necessarily spending more overall than the $24.4 billion offered by Michael Dell and partners.

There’s a good and not so good side for this depending on your view. As the Wall Street Journal explains, on one hand this so-called stub provides an opportunity for those interested to hold on to their existing shares in the hopes of making more money from a company turnaround. On the other, it makes it harder for a new CEO to execute if he has to answer to public shareholders, which is what Michael Dell wanted to avoid in the first place.

At least a couple of holders with more than 10% of Dell shares have already said they’d like to keep them.

Financing doesn’t appear to be firm for the Blackstone or Icahn offers, however. More information will need to provided before the “go shop” deadline on Friday so the special committee overseeing Dell’s buyout is able to determine whether the offers in fact constitute a superior proposal to the existing merger agreement.

Michael Dell, who still owns 15% of the shares of the company he started in his college dorm room, has said he is willing to explore in good faith the possibility of working with third parties on the alternate takeover proposals.




User Comments: 6

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1 person liked this | bexwhitt said:

Dell used to make really good PC's, then they changed into a bottom feeder and started to lose money, go figure

Guest said:

Dell laptops are ugly as sin, they use to be some nice descent looking machinery. Dell like most American Companies want to sell us what they wouldn't buy themselves.

Mbloof said:

DELL really has 3 problems facing it - to many models, way to many overlapping 'deals' and a declining PC market.

SCJake said:

I work with primarily Dell's for my business. Granted I would never buy one for a home desktop, but their laptops are actually quite nice. The business PC's are nice because are almost all (architecturally) compatible which is really nice for businesses who have to swap out a dead pc and then have to deal with someone whining that someone has a new computer. As far as workstations and business desktops go they are great. I dont understand why people always trash dell when they explicitly say that they are focusing on the business market, and what they put out for said market is actually good stuff.

Then again the primary trashers of Dell are gamers who really dont matter when it comes to Dell's opinion of pushing a solid business workstation

Guest said:

Dell used to make really good PC's, then they changed into a bottom feeder and started to lose money, go figure

Agreed. Same goes for HP, Toshiba, Acer, and even Sony. The best PC's as of now are Asus and Lenovo.

Guest said:

It amazes me how people still only mention PC's when talking about Dell. Seems that everyone forgets that the PC business is only roughly a little over 20% of Dell's business. They have in the past several years shifted into an Enterprise Server/Software/Storage/Services company.

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