Dell becomes prize for buyout triangle

 

Competing offers for Dell Inc have set the stage for a fierce buyout battle involving three separate groups, Reuters reported yesterday.

The world's number-three in PCs was due to be taken private by its founder and chairman Michael Dell and investment firm Silver Lake, but ashareholder backlash against the buyout group's tabled offer has led to a number of parties expressing an interest during the interim go-shop period.

The Wall Street Journal previously reported that maverick investor Carl Icahn, a vocal opponent of the buyout, had made an offer and Reuters cited an insider as confirming Blackstone Group LP had "submitted an indicative and preliminary offer" just prior to the expiration of the go-shop period.

The shareholder revolt began in early February with Southeastern Asset Management's letter to Dell's board. The letter expressed concerns over the board's acceptance of the buyout consortium's offer of $13.65 a share for the flagging computer giant. Southeastern, which holds an 8.5% stake in Dell, also outlined an analysis of Dell operations in the letter and estimated the company's worth to be at least $24 a share, which would have valued the buyout at over $42bn.

Since then, Dell stock has rallied and several shareholders have expressed solidarity with Southeastern. Icahn acquired a 6% holding over a two-week period and initially expressed a preference for the company to pursue capital restructuring. The details of his buyout offer have not been made public. Blackstone's more recent offer is said to exceed that of Michael Dell's party and may be as high as $15 a share. Dell shares stood at $14.14 at the close of Friday trading.

One source said that Blackstone intended approaching Oracle chief Mark Hurd to run the new company, but another insider said Hurd had no intention of leaving his current role.