Dell to get ri­val buy­out bids from Black­stone

The Pak Banker - - COMPANIES/BOSS -

Black­stone Group LP (BX) and ac­tivist in­vestor Carl Ic­ahn submitted pro­pos­als to buy Dell Inc. (DELL) that would ri­val a $24.4 bil­lion buy­out of­fer from Sil­ver Lake Man­age­ment LLC and com­pany founder Michael Dell, ac­cord­ing to peo­ple with knowl­edge of the mat­ter.

Black­stone, the world’s big­gest pri­vate-eq­uity firm, out­lined an of­fer val­ued at $13.65 to $14.50 a share, said one of the peo­ple, who asked not to be iden­ti­fied be­cause the process is pri­vate. Ic­ahn said he’d pay $15 a share, with a cap on the amount of cash used in the deal, two peo­ple said.

The pro­pos­als present un­ex­pect­edly se­ri­ous chal­lenges to Michael Dell’s ef­fort to take pri­vate the Round Rock, Tex­as­based com­pany he founded in 1984 as it strug­gles with com­pe­ti­tion from smart phones and tablets. The trans­ac­tion’s strengths in­clude the founder’s par­tic­i­pa­tion and his de­ci­sion to roll over his 15.6 per­cent stake to help fi­nance the pur­chase. It’s also rare for one pri­vate-eq­uity firm to seek to break up an­other’s deal.

Now, Dell’s board prob­a­bly will con­clude in the next few days that both pro­pos­als are rea­son­ably likely to be su­pe­rior, said one of the peo­ple. Un­der terms of the orig­i­nal Feb. 5 merger agree­ment with Sil­ver Lake, the board would then take time to de­ter­mine whether the coun­terof­fers are su­pe­rior. At that point Sil­ver Lake and Michael Dell, which of­fered $13.65 a share, would have three days to top them.

Black­stone and Ic­ahn submitted their pro­pos­als on March 22, the dead­line of a so-called goshop pe­riod de­signed to so­licit com­pet­ing bids for Dell. South­east­ern As­set Man­age­ment Inc. and T. Rowe Price Group Inc. (TROW), the com­pany’s largest out­side in­vestors, have said the orig­i­nal deal is too cheap. The stock, which closed on Fri­day at $14.14, has climbed since the lever­aged buy­out was an­nounced amid spec­u­la­tion that Dell would fetch a higher price.

A spokesman for the Dell spe­cial com­mit­tee run­ning the goshop process didn’t re­turn calls or e-mails seek­ing com­ment. David Frink, a spokesman for Dell, Chris­tine An­der­son, a spokes­woman for New York-based Black­stone, and Ic­ahn de­clined to com­ment.

Dell isn’t plan­ning to dis­close whether it re­ceived bids un­til March 25, peo­ple fa­mil­iar with the mat­ter have said.

Black­stone, work­ing with a group, would ac­quire Dell’s shares while in­clud­ing a pub­lic stub, a se­cu­rity that would al­low other in­vestors to be in­volved in the deal.

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