Michael Dell may be at risk of losing his namesake company.
On Monday Dell (DELL) confirmed weekend reports that private equity firm Blackstone Group has submitted preliminary takeover proposals to Dell’s board that would value the struggling computer maker at $14.25 a share. Earlier this month activist investor Carl Icahn declared his bid of $15 a share for Dell, which would increase his stake in the Texas-based company to 58%.
Icahn revealed to a Dell special committee last week that he owns 80 million shares, or less than 5% of the company. Icahn’s offer includes a $5 billion equity commitment as well as an additional $2 billion of cash equity financing, according to The Wall Street Journal.
Michael Dell, who started the eponymous company almost 30 years ago from his University of Texas dorm room, wants to take Dell private. Dell and his private equity partner Silver Lake are offering investors $13.65 a share or $24.4 billion. The Daily Ticker’s Aaron Task and Lauren Lyster discuss in the accompanying video that Dell and Silver Lake may be forced sweeten their deal to win over investors. Southeastern Asset Management, Dell’s biggest investor with a stake of nearly 8.4%, has formally denounced Michael Dell’s offer as too low and has vowed to reject it.
The computer maker would continue to be a public company under Icahn’s and Blackstone’s competing buyout proposals. Dell shareholders would hold on to their stakes in what the industry refers to as a “stub.”
Blackstone has already suggested possible candidates to replace Dell as CEO, The New York Times reports. Dell has no obligation to remain as CEO if his proposal does not win. Moreover, neither Icahn nor Blackstone have presented a detailed plan to fix the company.
Michael Dell returned to the company as CEO in 2007 after leaving in 2004. Dell has seen its PC market share crumble to rivals Hewlett-Packard (HPQ) and Apple (AAPL) among others. Research firm Gartner says Dell’s computer shipments dropped nearly 21% in the fourth-quarter of 2012 compared to the same quarter in 2011, versus a 4.9% decline for the entire PC industry.
Dell stock has gained more than 39% in 6 months.
Which offer is the best deal for Dell shareholders? Should Michael Dell stay on as CEO? Share your thoughts in the comment section below!
More from The Daily Ticker