In meetings with Blackstone executives, Dell said he would be more likely to support their proposal if he retained an influential role, a source familiar with the talks said. Negotiations are ongoing and the two sides may not reach an understanding. In February, Dell announced a $24.4 billion bid to take the company private again, a deal involving Silver Lake Management that has become increasingly less likely. Now, he is using his 15.6 percent stake in the company as leverage to keep his leadership role at the company, as the board weighs offers from both Blackstone and billionaire investor Carl Icahn, according to Bloomberg.
If another bid is superior and bars him from future involvement in the company, CEO Dell would cash in his shares and walk away, leaving the buyer to replace about $4.5 billion in financing he could have contributed, one of the sources said.
Reportedly, Blackstone initially assumed that Dell would not be participating in the buyouts. Silver Lake, which until a few days ago perceived Michael Dell as hostile to Blackstone’s proposal, now considers it possible that the CEO will drop out of their joint bid to back an alternative proposal, another person said. Dell has also not informed Silver Lake of his meetings with Blackstone.
Blackstone’s buyout proposal values Dell at $14.25 per share, while Icahn is offering $15 per share for up to 58.1 percent of the shares. Neither plan would be a complete takeover, each scenario has the company being partially traded on public markets. The two offers may be more appealing than the original Silver Lake and Michael Dell’s plan of $13.65 per share.
Blackstone is proposing a leveraged recapitalization transaction whereby investors could choose to get either all cash or equity, subject to a cap, if they want to stay invested in Dell. The shares would continue to be publicly traded. Icahn is offering shareholders the option to roll over their stakes or receive $15 a share in cash, with the amount of cash limited to $15.65 billion, according to the statement.
CEO Dell told his board that going private would be the best course of action because it would let him boost spending on acquisitions, sales staff and research and development, while investing in PCs and tablets and expanding Dell’s reach in emerging countries, according to the filing, Bloomberg said.
A spokesman for Dell could not be reached, and spokespeople for Silver Lake and Blackstone declined to comment.
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