THE WALL STREET JOURNAL.
Updated April 18, 2013, 11:33 p.m. ET
Blackstone Ends Pursuit of
By Sharon Terlep,
DAVID BENOIT and Shira Ovide
Blackstone Group LP has ended its pursuit of
Dell Inc., less than a month after the private-equity firm said it would
try to top a leveraged buyout by the computer maker's founder and a rival
Blackstone had been putting
together a bid for Dell to trump the $24.4 billion offer from founder and
Michael Dell and private-equity firm Silver Lake Partners. Blackstone's
offer would have kept part of the company in the hands of public
Blackstone, in a letter to the special board committee handling the deal
negotiations for Dell, cited declining personal-computer sales industrywide
as a factor in its decision, along with concerns about declines in Dell's
operating income, according to people familiar with the matter. A Blackstone
spokesman declined to comment.
Dell spokesman declined to comment.
Blackstone team was in Texas last week conducting due diligence on the
company, and its review raised doubts about the future of Dell's PC
business, said people familiar with the matter.
Blackstone had been studying ways to free up Dell cash that is held abroad
without incurring a multibillion-dollar tax bill, according to a person
familiar with the company's thinking. It isn't clear if this issue also
factored into Blackstone's decision.
Carl Icahn also had said he planned to bid for Dell.
special committee of Dell board members earlier said it believed both
potential counter bids could be superior to the Silver Lake deal and that it
would evaluate both offers should either Blackstone or Mr. Icahn present a
halt to Blackstone's rival deal effort leaves Silver Lake and Mr. Dell in a
stronger position to push ahead with their offer to buy all of the company's
shares not owned by Mr. Dell and his affiliates for $13.65 apiece.
Still, investors hoping for a sweeter offer had pushed up Dell shares above
the proposed buyout price, and several large Dell shareholders had agitated
against the deal from Silver Lake and Mr. Dell.
Southeastern Asset Managment Inc., Dell's largest outside shareholder, with
more than 8% of its stock, was also its most vocal against the buyout,
saying the $13.65 share price undervalued the company's stock and the
proposed buyout from Silver Lake and Mr. Dell didn't give current
shareholders ample chance to participate in any upside of a revival of the
Southeastern had been prepared to roll its stake into a Blackstone bid,
people familiar with the matter have said.
is still possible Southeastern would vote against the Silver Lake deal. On
Thursday evening, a Southeastern spokeswoman didn't have an immediate
Since Blackstone formally expressed its interest in making a bid for Dell in
late March, more evidence emerged of a sinking market for PCs, Dell's
largest source of revenue.
week, market-research firm IDC said global shipments of personal computers
fell nearly 14% in the first quarter from a year earlier.
said it was the worst quarterly drop for PC shipments since it started
tracking the data in 1994. Dell shipped 11% fewer PCs than a year earlier,
according to IDC.
Thursday, Blackstone's president, on the company's earnings call, emphasized
the company's commitment to technology-sector buyout deals. Hamilton "Tony"
James said, "We're serious about tech. We like the space. It's not a space
with as many credible players as some of the other industries."
Blackstone had been in negotiations with Mr. Dell on whether he would roll
into their deal the 16% of shares he and his affiliates control, as he is
doing with Silver Lake, people familiar with the discussions said.
Blackstone's letter to Dell's board thanked Mr. Dell for his cooperation
two sides had several meetings, but it remained unclear if they could reach
a deal that would leave Mr. Dell controlling the future of his namesake
company, a condition he attached to rolling his stake, one of the people
Blackstone had also been in talks with other potential CEOs for Dell.
Dell, under a deal struck by the special committee, agreed to reimburse
Blackstone for up to $25 million for its work in considering a formal bid.
In 4 p.m.
Nasdaq Stock Market
Thursday, Dell shares were at $13.95, down 2 cents.
contributed to this article
version of this article appeared April 19, 2013, on page B1 in the U.S.
edition of The Wall Street Journal, with the headline: Blackstone Abandons
Its Pursuit Of Dell.
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