Dell also received a $15-a-share bid from Carl Icahn's holding company, Icahn Enterprises (IEP), which will roll the activist investor's $1 billion stake into a takeover and use a mix of equity, debt and financing from Dell's factoring business to fund the deal.
To be seen is whether the Michael Dell-led consortium will try to improve on its Feb. 5 offer to take the struggling PC giant private. Some media reports indicate Dell could join the Blackstone consortium, while others also speculate Icahn and Blackstone could wind up working together.
The initial deal values Dell's shares at $24.4 billion and relies on over $12 billion in debt financing to go with an equity contribution from Michael Dell worth nearly $4 billion.
"We intend to work diligently with all three potential acquirers to ensure the best possible outcome for Dell shareholders, whichever transaction that may be," Alex Mandl, chairman of the Dell committee, said in a statement Monday.According to the Blackstone-led group's offer, investment bank Morgan Stanley will lead debt financing for the takeover deal. However, the private equity firm didn't specify an exact financing need on its $14.25-a-share offer. The offer, which was sent March 22, is signed by Chinh E. Chu and David Johnson of Blackstone; Robert A. Kindler, vice chairman of Morgan Stanley; and David Fox and Daniel Wolf of law firm Kirkland & Ellis. Icahn's offer seeks to acquire up to 58% of Dell's shares and consists of about $4 billion in cash and an additional $1 billion by way of the company's recently acquired stock for a total of about $5 billion in equity. Remaining sources of financing will consist of $7.4 billion of cash currently available at Dell, $1.71 billion in new factoring receivables and $5.22 billion in new debt. Southeastern Asset Management and T. Rowe Price, two of Dell's largest independent shareholders that opposed the initial $13.65-a-share deal in February, would need to roll over their share holdings into the surviving company under the Icahn offer. If investors were to support Icahn's proposal, Icahn Enterprises would own 24% of Dell's remaining shares, while Southeastern and T. Rowe Price would hold 17% and 9.3%, respectively. Icahn's proposal references investment bank Jefferies as having advised the firms bid. "We are pleased that the alternative proposals submitted to the Dell special committee are structured to give shareholders the opportunity to continue to participate in the company's future prospects, while also providing a higher cash component for shareholders who choose to exit their investment," Southeastern Asset Management said in a March 25 statement. Prior to Dell's disclosure, Southeastern Asset Management had been reported as interested in making a bid for the company. Both Southeastern Asset Management and Icahn also supported a dividend recapitalization of Dell earlier in March, in a move they said would reflect the company's true value. Dell shares traded higher for the week, closing the first quarter up 41%. -- Written by Antoine Gara in New York Follow @antoinegara