Business Technology

Tuesday 30 September 2014

Blackstone backs out of battle to buy Dell

Greg Roumeliotis and Soyoung Kim

Published 20/04/2013 | 05:00

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Michael Dell

Private equity firm Blackstone Group has ended its efforts to buy computer giant Dell, clearing the way for founder Michael Dell along with his private equity partner Silver Lake to go ahead with a rival $24.4bn (€18.7bn) acquisition.

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The company employs more than 2,000 people at plants in Limerick and Cherrywood, Dublin.

New York-based Blackstone pulled out of the bidding for Dell just a month after it first launched a challenge to billionaire Mr Dell's attempt to take private the PC maker he founded.

The equity firm withdrew, citing an unprecedented 14pc drop in industry PC sales in the first quarter of 2013 and a lower earnings forecast by Dell's management, which saw operating income drop from $3.7bn to $3bn in the current fiscal year, a source said.

Blackstone and activist investor Carl Icahn, who has taken a significant stake in the computer company and opposes Mr Dell's buyout, had made preliminary offers to the company challenging the deal with Silver Lake.

Icahn's chances of a successful rival offer are viewed by analysts and investors as slimmer than Blackstone's, yet the deal with Silver Lake still faces significant opposition from some Dell shareholders, including Southeastern Asset Management, the activist investor that owns 8.4pc of the company.

Dell, Blackstone and Silver Lake declined to comment. Icahn could not immediately be reached.

Icahn and Blackstone each offered alternatives that would keep part of the company public. Icahn has proposed paying $15 per share for 58pc of Dell, while Blackstone had indicated it could pay more than $14.25 per share for the whole of Dell.

Both deal structures involve saddling the company with a good deal of debt and keeping it on public markets.

Silver Lake's $13.65 per share all-cash offer would see Dell go private.

Dell said on Tuesday that Icahn had agreed not to raise his stake in the company to more than 10pc and that he could team up with other shareholders on a potential bid.

Fight

On the same day, Icahn said in a brief statement that his latest agreement with Dell did not prevent him from embarking on a proxy fight.

Dell was regarded as a model of innovation as recently as the early 2000s, but has struggled to make up for a declining share of the global PC market.

The company is now trying to transform itself into a provider of enterprise computing services, reducing its reliance on PC sales. (Reuters)

Irish Independent

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