Dell Bidding War Gets Ugly

— March 26, 2013

Michael Dell’s attempt to take over the company that bears his name hit two stumbling blocks over the weekend, as separate bids from The Blackstone Group and major stockholder Carl C. Icahn sought to displace Dell’s offer of $24.4 billion.

Last month, Michael Dell, with support from Silver Lake Partners, revealed his offer to take back control of the PC manufacturer with plans to eventually take the company private. The board of directors took the offer under consideration and implemented a special committee to request and gauge additional bids during a 45-day go-shop period.

“Pursuant to the existing merger agreement, subject to certain requirements, the special committee has the right to terminate the agreement in order to accept a superior proposal,” Dell stated in a release. “The special committee has not determined that either the Blackstone proposal or the Icahn proposal in fact constitutes a superior proposal under the existing merger agreement and neither is at this stage sufficiently detailed or definitive for such a determination to be appropriate. There can be no assurance that either proposal will ultimately lead to a superior proposal.”

Blackstone stated that it would bump Michael Dell’s offer of $13.65 per share to $14.25 and both Blackstone and Icahn said that they would keep the company public if they took the helm.

In a letter to the board, Southeastern Asset Management, one of Dell’s largest shareholders said that “the board of directors appears to have dismissed better alternatives for public owners and selected a transaction, which has been publicly derided by shareholders as opportunistic and grossly undervalued, that favors management. We reiterate our demand that the board of directors pursue proposals that are more favorable to shareholders.”

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