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Blackstone has given up its quest to own Dell and cleared the way for tinman Michael Dell and his private equity partner Silver Lake to go ahead with a $24.4 billion deal to acquire the PC maker.
Blackstone was seen as a likely contender to force Dell out of his own company and to take over. The company pulled out just a month after it first launched a challenge to the billionaire’s attempt to take private the PC maker he founded.
According to the New York Times, the company appears to have given up after it realised that things were worse in Dell land than it expected. There was a 14 percent drop in industry PC sales in the first quarter of 2013 and a lower earnings forecast by Dell’s management, which saw operating income dropping from $3.7 billion to $3 billion in the current fiscal year.
Activist investor Carl Icahn, who has taken a significant stake in the company and opposes Michael Dell’s buyout is still in the running but his chances are seen as slimmer than Blackstone’s. Some Dell shareholders, including Southeastern Asset Management, and the activist investor that owns 8.4 percent of the company are also hoping to have a crack at stopping the deal.
Icahn and Blackstone offered alternatives that would keep part of the company public. Icahn has proposed paying $15 per share for 58 percent of Dell, while Blackstone had indicated it could pay more than $14.25 per share for the whole of Dell.
But both cunning plans involved saddling the company with a good deal of debt and keeping it on public markets. Silver Lake’s $13.65 per share all-cash offer would see Dell go private.
Earlier this week Icahn agreed not to raise his stake in the company to more than 10 percent so he could team up with other shareholders on a potential bid for the firm.