When Michael Dell joined forces with Silver Lake Partners in an attempt to take the company that he formed Dell Computers back into private hands, the worst possible scenario that he may have imagined is that it would develop into a three-horse race.
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In what is now shaping up to be the largest corporate buyout for many years, private equity group Blackstone, headed up by Stephen Schwarzman has apparently begun to show considerable interest in taking a major stock holding in Dell, joining renowned corporate raider Carl Icahn who seems determined to put the block on Michael Dell and Silver Lake Partners proposed $24.4bn buyout matter.
Over the weekend representatives of both Blackstone and Carol Icahn made contact with a special committee established by Dell’s shareholders expressing their intention to submit formal bids for blocks of shares in the company. According to reports Schwarzman is interested in acquiring the entire share value of the company, and is prepared to pay a minimum of $14.25 a share. Icahn’s offer, although more on generous at $15 a share, is only for around 60% of the company’s total issued share value. An alternative that may well be more appealing to Michael Dell.
Where Michael Dell and its partners are left looking as if they had been caught with their hands in the corporate cookie jar is that both offers are considerably higher than the $13.65 a share offered by the Dell and Silver Lake partnership. Either way the intervention of the first Icahn and later Blackstone has caused a form of knock-on effect with shares in Dell rising slowly, closing at $14.14 before the weekend.
Market watchers predict that the shareholders’ committee will need to take both of these offers seriously, and consequently require the Dell and Silver Lake team to match the highest offer if they wish to gain control.
Blackstone, the largest private equity group in the United States in terms of assets, is reportedly sitting on the considerable investment capital, that has seen them make substantial investments, particularly in the domestic property market in the last few months. Despite these investment Schwartzman’s company certainly has the financial wherewithal to lay out the more than $26 billion dollars to buy the Dell company, lock stock and barrel.
On the other hand many of the more cynical market watchers continue to insist that Carl Icahn’s offer may be a ruse to push up Dell’s share values, a strategy that the inveterate corporate raider has used on several occasions in the past.
Icahn has already called on the Dell Corporation to issue a generous dividend to shareholders, a request which, so far, has fallen on deaf ears.
What seems for sure is that the last shots have not been fired in the Dell buyout and in today’s fast-moving and transparent high-tech world, as Michael Dell has discovered, it’s almost impossible to fly under the radar.
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