Blackstone Group LP Drops $24.4 Billion Buyout Bid, which leaves Dell with 2 potential bidders. CEO Michael Dell and billionaire hedge fund titan Carl Icahn. Dell has offered $24.4 billion, or $13.65 per share, and would take the company private. Hedge fund hot shot Carl Icahn has made a preliminary proposal to buy a majority of Dell stock while keeping it publicly traded. Icahn plans to pay up to $15 per share for 58 percent of Dell’s stock.
In the letter Blackstone said that while the bidders still believe Dell is “a leading global company with strong market positions,” it also cited Dell’s “rapidly eroding financial profile.” It noted that Dell has lowered its operating income forecast for this year to $3 billion, from $3.7 billion. That $3.7 billion, in turn, had been lowered this year from a $5.6 billion figure that Dell had circulated internally in July, according to regulatory filings.
Dell shares declined 3.8 percent to $13.42 at 2:30 p.m. in New York. Earlier, they touched $13.40, 1.8 percent less than the original deal price.
Dell’s operating margin narrowed to 4.88 percent in the fiscal fourth quarter through January, from 5.81 percent in the year-earlier period, data compiled by Bloomberg show. Cash flow from operations fell to $1.44 billion from $1.84 billion a year earlier, the data show. The company reported an 11 percent drop in sales, to $14.3 billion.
Hedge fund titan Carl Icahn Proposal
Unlike Silver Lake, which has a significant Silicon Valley presence with an office in Menlo Park, California, New York- based Blackstone doesn’t have a technology-focused investment record and views the deal as a riskier turnaround project, one of the people familiar with the situation said.
Under terms of its agreement with Dell, Silver Lake agreed it could not back out of its bid. If it tried, Dell could sue and get an injunction forcing Silver Lake to complete the deal.
Blackstone had offered to pay at least $14.25 a share to current investors with an option to hold onto some of their stake through a so-called equity stub. Billionaire Carl Icahn bid $15 a share in cash for as much as 58.1 percent of Dell’s stock. The Dell-Silver Lake deal would be a straight all-cash buyout of the shares Michael Dell doesn’t own for $13.65 a share