It is no secret that Michael Dell wants to buyout his company, Dell, the world’s third-largest maker of personal computers. So far, Silver Lake Management is the only party to come forward with a reasonable bid. According to the official word, the current offer for the buyout stands at $24.4 billion. However, the top brass at Dell and some investors have expressed the concern that their company is being undervalued. Hence, they are seeking other parties to come and put their bids forward.
The Blackstone Group has seemingly heeded their request and is said to be contemplating a bid for Dell which will be greater than the proposed $24.4 billion bid already made. Blackstone doesn’t have the clout to buy Dell on its own so it is quite possible that there will be a number of investors, each of whom would receive a certain stake in the new company. So far, the firm has not reached a conclusion regarding the amount of the bid or rather whether it should bid or not.
There is a strict deadline for the Dell board to follow on the matter. They have until 22nd March to entertain other higher bids. If they find an offer which is worth pursuing, only then can the date be extended to make room for negotiation. Else, they might have to agree to the proposed merger with Silver Lake. Either way, this would end up being the largest leveraged buyout of a company in the technology sector since the recession set in.
However, it would take a fair bit of convincing on the board’s part. A couple of Dell’s major external investors have already voiced their disapproval at the bid made by the founder along with Silver Lake Management. They feel that the bid undervalues the company significantly and that they want the company to seek a higher bid. The company has so far not provided any details regarding whether or not they will go ahead with the Silver Lake merger.
Despite not having made a bid yet, Blackstone is considered to be a serious contender. Market experts believe that the firm can arrange for the resources to pay for the buyout. The Blackstone Group has already inspected the books of the company. Hence, they have a clear idea of what they would be getting into should they go ahead with their plans and outbid Silver Lake Management. Among the other parties to have gone through Dell’s books are Lenovo and HP, Dell’s rivals.
If the Silver Lake bid has to be accepted, a majority of the shareholders would have to vote for it. However, Michael Dell would not be allowed to vote as his 15.6% stake would be carried into the new company. He is also investing some of his cash to make the deal go through. The Dell board can go over other offers but so far they haven’t received any. With the due date just round the corner, Blackstone has to decide quickly if it wants to bid or not. Otherwise, Silver Lake Management’s bid would win.
[Image via nbcnews]