Blackstone, Icahn set up three-way battle to buy out Dell

Sun Mar 24, 2013 9:09am EDT
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By Greg Roumeliotis and Jessica Toonkel

NEW YORK (Reuters) - Dell Inc appeared to have received competing offers following a $24.4 billion agreement last month to be taken private by its founder and private equity firm Silver Lake, setting up a tug-of-war for the world's No. 3 PC maker.

Blackstone Group LP submitted an indicative and preliminary offer ahead of the expiration of a "go-shop" period on Saturday that allowed Dell to explore other options, a person familiar with the matter said.

The buyout firm has not yet arranged bank financing, though it has put potential lenders on stand-by, according to a second source familiar with the matter.

Billionaire investor Carl Icahn, who has built up a minority stake in Dell and opposes the offer by founder Michael Dell and Silver Lake, also made an offer, according to the Wall Street Journal.

Details of the competing offers were not immediately known, but any rival bid would have to prove more appealing than the $13.65-per-share offer of Dell's founder and his private equity partner.

Blackstone is offering between $13.65 and $15 a share - trumping Michael Dell and Silver Lake's $13.65 - in a deal that will invite shareholder participation, the Wall Street Journal reported. Blackstone has approached a number of firms, including GE Capital, about financing for the deal, the second source familiar with the situation said. Dell shares closed Friday at $14.14.

The firm could finance the deal by selling a piece of Dell's business, the source said.

Any rival bid could use a "public equity stub," which gives existing shareholders the option to keep a stake in the company after a buyout, a person familiar with the matter said earlier this week.   Continued...

Michael Dell Chairman and CEO of Dell Inc. arrives at the launch event of Windows 8 operating system in New York, October 25, 2012. REUTERS/Lucas Jackson