Thursday 19 April 2018

Rival bidders challenge Dell founder over buyout

Jessica Toonkel and Greg Roumeliotis

DELL said it received alternative proposals from private equity giant Blackstone Group and activist Carl Icahn that could be superior to the $24.4bn (€18.9bn) takeover offer from founder Michael Dell and private equity fund Silver Lake Partners.

The computing giant, which employs more than 1,800 people between Limerick and Dublin, began exploring a possible buyout in January.

Michael Dell is willing to explore the possibility of working with third parties regarding alternative offers, the company said yesterday.

However, it said the special board committee considering a sale continues to support the company's pending sale to Michael Dell and Silver Lake.

Southeastern Asset Management, the company's largest shareholder after Michael Dell, and a staunch opponent of the founder's buyout offer, said it was pleased that the two new bids were structured in such a way that shareholders could remain invested in the company.

The special committee was evaluating the new takeover proposals to decide whether either, or both, were likely to trump the existing take-private deal, Reuters reported, quoting a source familiar with the discussions.

Mr Icahn offered $15 per share for 58pc of Dell, while Blackstone proposed paying more than $14.25 per share. The Silver Lake group offered $13.65 per share for all of Dell.

Dell's shares rose 2.9pc to $14.55.

Icahn Enterprises raised the prospect of working with Blackstone, saying the two groups had held preliminary talks.

"We plan to review the Blackstone proposal in greater detail," Icahn Enterprises said yesterday, adding that the Michael Dell-Silver Lake proposal "significantly undervalues Dell".

One issue for the special committee is how to compare the proposals. Both Blackstone's and Icahn's proposals envision that a portion of Dell's stock will remain publicly traded.

Silver Lake was not reachable for comment outside normal business hours in the US.

"We continue to believe a higher bid than the current $13.65 per share offer will likely be offered but, based on our assumptions, a $15 per share bid may be a threshold," Wells Fargo Securities analyst Maynard Um said in a note.

"We believe a higher Silver Lake/Dell bid might still be a more attractive and strategic option, assuming information regarding the public stub and financial services sale is accurate," he said.

The rival bids for Dell throw the future of the PC maker into question.

For a deal of this size, a "go-shop" period – during which the target company actively looks for rival offers – rarely yields competing offers.

The new bids could turn the sale of Dell into a three-horse race that could drag out for months.

It also could threaten the future of Michael Dell, who founded the technology giant at the age of 19 with just $1,000.

Under the Silver Lake plan, he planned to contribute his roughly 16pc share of Dell's equity to the deal, along with cash from his investment firm MSD Capital, and remain CEO of the company. (Reuters)

Irish Independent

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