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Blackstone considers bidding for Dell

The personal computer maker is seeking rival offers to a $24.4-billion proposal from Silver Lake Management.

March 19, 2013|Bloomberg News

Blackstone Group is weighing a bid for Dell Inc., the computer maker seeking offers to rival the proposed $24.4-billion buyout by its founder and Silver Lake Management, said people with knowledge of the matter.

Blackstone may bid as part of a group including other investors, said one of the people, who asked not to be named because the process is confidential. The New York private-equity firm hasn't made a decision, said another person. Under the go-shop provision of the Silver Lake merger agreement, Dell's board has through March 22 to seek superior proposals, and can negotiate beyond that date if it receives an offer it deems serious.

Blackstone and larger personal computer makers Hewlett-Packard Co. and Lenovo Group Ltd. have inspected Dell's books after signing non-disclosure agreements, people familiar with the matter said March 7. Blackstone's interest in the company, the world's third-largest PC maker, is considered more serious than that of the other companies reviewing Dell's finances, said one of the people familiar with the situation.

David Frink, a spokesman for Dell, declined to comment. Peter Rose, a spokesman for Blackstone, wasn't immediately available to comment.

The Silver Lake offer has met with opposition from Dell's largest outside investors — Southeastern Asset Management Inc. and T. Rowe Price Group Inc. — which argued that the current bid fails to reflect the company's fair value. If successful, the deal would be the largest leveraged buyout of a technology company since the financial crisis.

Activist investor Carl Icahn also has waded into the fray by amassing his own stake in Dell and pushing for alternatives to the Silver Lake proposal, as well as a $9-a-share special dividend. Dell of Round Rock, Texas, has traded above the $13.65 buyout price for at least the last two weeks, signaling that investors expect a higher offer.

Dell's shares fell 14 cents Monday to $14.17.

The bid from Silver Lake requires approval from a majority of shareholders, excluding Michael Dell, who is contributing his 15.6% stake to the new company in addition to investing additional cash. As part of the original deal, Dell agreed "to explore in good faith" working with another bidder that could beat Silver Lake's offer, according to a Feb. 6 filing with the U.S. Securities and Exchange Commission.

No one has yet submitted a proposal or letter to the board at this point for consideration, said another person with knowledge of the situation. The board would have to receive something by March 22 and then determine whether the interest would reasonably lead to a higher offer, this person said.

Icahn, who has also been doing due diligence on Dell, this month asked the company's directors to pledge that they would implement his dividend proposal if shareholders reject the Michael Dell-led offer. Otherwise, Icahn said, he will start a proxy fight and seek to replace the board with his own slate.

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