Hedge Funds |
Mergers & Acquisitions
| March 29, 2013, 4:04 pm
The Path to a
Three-Way Race for Dell
MICHAEL J. DE LA MERCED
Joe Raedle/Getty Images
A Dell computer for sale at an Electric Avenue
store in Miami
Though the race for
Dell Inc. now has narrowed to
three contestants, there were many more who arose over a month ago.
Advisers to Dell directors spoke to 71 potential bidders during a 45-day
period aimed at flushing out alternatives to a $24.4 billion offer by
Michael S. Dell and the
investment firm Silver Lake, according to a securities filing by the company
The long-awaited proxy filing includes one of the lengthiest recaps of a
merger’s history in recent memory, detailing over 26 pages the months-long
negotiations that led to the Dell transaction. But it especially shines a
light on the 45-day “go-shop” period, which wrapped up last week with two
preliminary bids by
the Blackstone Group and the
Carl C. Icahn.
Dell is expected to point to the efforts recounted in the proxy as proof
that its board fought hard to find the best possible outcome for
shareholders, as several investors continue to fight the existing
$13.65-a-share bid by Mr. Dell and Silver Lake as far too low.
According to Friday’s filing, bankers at
Evercore Partners began
reaching out to a panoply of possible strategic and financial buyers shortly
after the deal with Mr. Dell was signed on Feb. 5. In total, the investment
bank spoke to 21 other companies, 20
private equity firms and 30
other potential investors.
According to the filing, several potential suitors ultimately were rejected
because they were interested only in a piece of Dell’s businesses. A special
committee of the company’s board was primarily interested in selling the
company as a whole, mirroring the proposal by Mr. Dell and Silver Lake.
On Feb. 6, Blackstone contacted Evercore, saying it was interested in
participating in the go-shop process. The private equity giant had already
expressed interest in potentially bidding for Dell the previous month, after
word of the company’s deal deliberations emerged in the press.
A month later, Blackstone, together with potential partners, met with Mr.
Dell to further discuss a potential bid.
Other private equity shops emerged as well. The filing names a “Sponsor B”
that had previously held discussions with Dell directors late last year,
willing to take another look at the company despite passing on making a bid
the first time. People briefed on the matter identified that firm as TPG
Ultimately, TPG decided again not to participate in any bids.
A “Sponsor C” also expressed preliminary interest, but ultimately decided to
walk away after inspecting Dell’s books.
A corporate bidder, identified as “Strategic Party A,” contacted Evercore on
Feb. 8 to say it was interested in information about Dell’s financial
services arm. That company — which people briefed on the matter said was
GE Capital — later expressed
interest in working with whatever group Blackstone convened to make a bid.
At least three other strategic buyers sought to gain access to Dell’s books.
Most were denied access because they appeared interested in only bidding for
part of the company.
Mr. Icahn, who had amassed a position in Dell, first contacted Evercore on
Feb. 26 about signing a confidentiality agreement. Over a week later, the
billionaire wrote to the Dell special committee, disclosing owning a
“substantial” stake and warning that he would fight the proposed takeover by
By March 11, Dell advisers gave Mr. Icahn access to Dell’s private financial
By the go-shop’s deadline of March 22, Evercore bankers received three
expressions of interest. One was from GE Capital, proposing to buy Dell
Financial Services only if combined with any takeover proposal, including
Blackstone also submitted an offer, now known to be over $14.25 a share and
which would leave an unspecified portion of Dell public to let investors
continue owning a piece of the company if they so wished. The firm disclosed
that it was working with Francisco Partners and Insight Venture Partners.
In a twist, however, Blackstone demanded that the Dell special committee
reimburse the costs of assembling that rival bid, up to $25 million. That
request was granted on Monday.
Mr. Icahn submitted his offer, in which he would buy about 58.1 percent of
the company for about $15.6 billion, or $15 a share. His offer envisioned
several major shareholders, including Southeastern Asset Management and
T. Rowe Price, contributing
their stakes as well.
Privately, some Dell advisers considered Mr. Icahn’s proposal a non-starter
and a place-holder to keep negotiating with the special committee, according
to people briefed on the matter. The hedge fund manager has said that he is
reviewing Blackstone’s offer as well, leaving the door open to joining that
A version of this article
appeared in print on 03/30/2013, on page B3 of the New York edition with the
headline: Filing Shows Twisting Path To Three-Way Race for Dell.
The New York Times Company