This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Blackstone Ditches $25 Billion Dell Deal Amid PC Declines

Stocks in this article: DELL BX IEP HPQ

Updated from 9:21 a.m ET to include Dell comments and Friday share prices.

NEW YORK ( TheStreet) -- The battle for Dell (DELL) will continue without private equity giant Blackstone Group (BX).

Blackstone Group said Friday it is withdrawing a $14.25 a share proposal for Dell because of recent sharp declines in the personal computer market, which undercut the prospect of a turnaround.

The firm is withdrawing its offer, which valued Dell shares at about $25 billion because of "an unprecedented 14 percent market decline in PC volume in the first quarter of 2013, its steepest drop in history, and inconsistent with management's projections for modest industry growth," according to a letter sent to Dell.

Earlier this month, technology research firm International Data Corporation said PC shipments in the U.S. fell fell 13.9% year-over-year to 76.3 million units in the first quarter, sharply worse than the 7.7% the firm had forecast.

Dell shares were trading lower by over 3.5% in early Friday trading to $13.44, below all proposals to take control of the computer maker.

Prior to Friday's decision to abandon its $14.25 a share proposal, a source familiar with the Blackstone investor group said the firm had been in contact with Michael Dell and had traveled to the company's Round Rock, Texas headquarters, as it conducted a due diligence process.

In a letter to Dell, the private equity firm said it learned that the company had lowered its operating income projections for 2013 to $3.0 billion from $3.7 billion, indicating a "rapidly eroding financial profile" of the company.

"As the Board's Special Committee continues to oversee its process to ensure the best possible outcome for Dell shareholders, we remain focused on our customers and on providing innovative products and solutions to help them succeed," David Frink, a Dell spokesperson, said in an e-mailed statement.

Blackstone's withdrawal leaves a $13.65 a share bid for Dell by Silver Lake Partners and founder Michael Dell, as well as a $15 a share proposal for a controlling stake in Dell floated by activist investor Carl Icahn, with both offers running a close contest.

On Tuesday, Icahn reached a standstill with Dell that will cap his holding in the computer giant to 10% as he seeks support for his offer, which would keep Dell as a publicly traded company.

Icahn's proposal relies on the support of both Southeastern Asset Management and T. Rowe Price, an institutional shareholder, which previously stated a lack of support for Silver Lake's $13.65 a share offer.



Southeastern Asset Management, one of Dell's (DELL) largest independent shareholders, said earlier in April both a $14.25 a share proposal by the Blackstone Group (BX) and a $15 a share proposal by Carl Icahn to buy the struggling PC-maker were superior to the company's proposed $24.4 billion buyout deal with founder Michel Dell and Silver Lake.

Southeastern's support for either proposal indicated that Icahn was still gunning for Dell, despite media reports to the contrary.

Icahn's proposal for the acquisition of up to 58% of Dell's shares hinges on support from Southeastern Asset Management and T. Rowe Price, in addition to the roughly $1 billion stake Icahn Enterprises holds in the Dell's shares.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs