Dell studies offers amid bidding war


A bidding war broke out Monday for U.S. computer maker Dell as two new acquisition offers emerged in competition with the private buyout led by founder Michael Dell.

The company said the offers were from billionaire corporate raider Carl Icahn and investment fund Blackstone Group.

Both offers “could reasonably be expected to result in superior proposals,” but further study is needed, Dell said in a statement.

Dell said its special committee, which had set a Friday deadline, would continue negotiations on both offers.

“We are gratified by the success of our go-shop process that has yielded two alternative proposals with the potential to create additional value for Dell shareholders,” said Alex Mandl, chairman of the special committee. “We intend to work diligently with all three potential acquirers to ensure the best possible outcome for Dell shareholders.”

The new offers suggest Dell could bring a higher value than the $24.4 billion proposed in the initial buyout offer, analysts said.

The initial offer amounted to $13.65 per share, but Brian White at Topeka Capital Management said bids could go considerably higher. “With three forces at work, we believe a higher buyout bid is in the cards and we continue to believe that an $18 (per share) buyout price for Dell makes sense; however, it is unlikely that this price level will occur in the first round of bidding,” White said.

Roger Kay, an analyst with Endpoint Technologies, said the new bids suggest Dell may have been unfairly punished by the stock market, amid gloomy predictions about a shift away from traditional computers.

In February, the company unveiled plans to go private in a buyout led by founder Dell, backed by equity investment firm Silver Lake and a loan from Microsoft.

According to the details released Monday, Blackstone proposed a “leveraged recapitalization” which would offer existing shareholders $14.25 per share but allow those who want to hold onto shares to do so. Under the deal, shares would remain publicly traded on the Nasdaq.

Blackstone said its offer “will deliver significantly greater value” to shareholder and provide “a leveraged upside” for those seeking to hold onto their shares.

The Icahn offer would inject an additional $5 billion into Dell, paying $15 per share for up to 58 percent of Dell shares. The existing shareholders would have their shares rolled over into a new company, with Icahn controlling 24.1 percent, Southeastern Asset Management 16.6 percent and T. Rowe Price 9.3 percent.

The initial offer led by Michael Dell would delist the company from stock markets and could ease some pressure on Dell.