And then there were two. Once Blackstone Group (NYSE:BX) dropped out of the bidding for Dell (NASDAQ:DELL), the only thing stopping a charge from activist shareholder Carl Icahn was a special committee’s acceptance of a deal from founder Michael Dell and Silver Lake. While many consider leadership by Michael Dell a favorable alternative, essential price-per-stock considerations were leaving the door open for an Icahn bid.
Analysts familiar with Icahn’s techniques suggested the investor, who holds 4.6 percent of Dell shares, will wait and see what the special committee handling the sale does with the billionaire founder and Silver Lake bid. The problem with the bid of Michael Dell’s group is many shareholders consider it a low-ball price at $13.65 per share (Blackstone had initially suggested $14.25). Southeastern Asset Management, a large shareholder, has deemed the price of $13.65 unacceptable.
That opinion, shared by many other investors, keeps the door open for Icahn and his very aggressive offer of $15 per share. However, most would agree that Michael Dell’s money is preferable to Carl Icahn’s stewardship moving forward. They just want to get a price they consider fair. As the shift toward private ownership moves forward, it seems safe to bet Silver Lake and Dell want no part of Icahn in the final buyout group. Southeastern, on the other hand, could find a place at the table…
As the situation stands, there is no reason for Dell’s group to raise the price per share quoted in their first offer. If the special committee rejects that proposal, they can make a counter offer. That would be Icahn’s moment to step in with a proxy solicitor and potentially attract enough votes to pull off his hostile bid. The price of Dell stock fell nearly 4 percent to $13.40 on Friday.
At a bid offering $1.35 more per share, Icahn does have a lot going for him. Yet Dell and Silver Lake could leave some part of the company open to the public if the deal cannot be closed as is. According to Ronald Barussh in the Wall Street Journal, Dell’s group has already been financially squeezed and unlikely to bid anywhere near Icahn, let alone Blackstone. Either way, big changes are in the works for Dell.