independent

Saturday 19 April 2014

Michael Dell to weigh Blackstone offer with CEO guarantee

Michael Dell wants to stay on as chief executive

DELL founder Michael Dell will only consider backing a buyout by Blackstone if the private-equity firm guarantees he can remain as chief executive officer, according to a person familiar with the discussions.

In several recent meetings in Austin, Texas, with Chinh Chu and David Johnson – the Blackstone executives overseeing the firm's bid – Mr Dell said he would be more likely to support their proposal if he retained an influential role.

Negotiations are ongoing and the two sides may not reach an understanding. Mr Dell said on February 5 that he agreed to take his company private in a $24.4bn transaction with Silver Lake Management.

He's now using his 15.6pc stake as leverage to preserve his leadership position as the company weighs competing offers from Blackstone and billionaire investor Carl Icahn, said a source.

If another bid is superior and bars him from future involvement in the company, CEO Dell would cash in his shares and walk away, leaving the buyer to replace about $4.5bn in financing he could have contributed.

Blackstone had initially assumed Mr Dell wouldn't participate in a buyout with the firm. Silver Lake, which until a few days ago perceived Mr Dell as hostile to Blackstone's proposal, now considers it possible that the CEO will drop out of their joint bid to back an alternative proposal. Mr Dell didn't inform Silver Lake of his recent meetings with Blackstone, a source said.

David Frink, a spokesman for Dell, couldn't be reached for comment. Peter Rose a spokesman for Blackstone, and Charlotte McCrum, a Silver Lake spokeswoman, declined to comment.

The offers from Blackstone and Icahn could end up being superior to the $13.65-a-share buyout planned by Mr Dell and Silver Lake, according to a statement last week from Dell. (Bloomberg)

Irish Independent

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