Icahn may join forces with Blackstone to win Dell from its founder

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Icahn may join forces with Blackstone to win Dell from its founder

Warwick Ashford

US billionaire investor Carl Icahn may join forces with private-equity group Blackstone to outbid Michael Dell for the company he founded.

Shortly after Icahn and Blackstone registered their interest in the company ahead of the weekend deadline, the investor revealed he was in talks with the equity group.

In an attempt to regain control of the company, after 24 years, to turn it around, Michael Dell made a $24.4bn offer in February with private equity firm Silver Lake, which values Dell at $13.65 a share.

But Icahn, who owns a $1bn stake in the company, came out in support of the biggest shareholders, who want to keep the company public and believe it is worth around $24 a share.

Icahn has proposed paying $15 a share for 58% of Dell, while Blackstone has indicated it can pay more than $14.25 a share for the whole business, leaving Dell as a publicly listed company.

Top investors welcomed the prospect of a higher valuation and the opportunity to retain their stakes, according to Australian news reports.

The outcome of the bidding process will determine the future of Dell, which rose to success through online sales of cheap PCs and low production costs, but now has only a 10% share of the global PC market following the rise of tablets and smartphones.

Dell is believed to have slashed its internal forecast for fiscal 2013 operating profit of $3.7bn down to just $3bn.

Dell's shares closed up 2.6% at $14.51 on Monday, indicating investors expect a deal to be done at a price higher than the bid by Michael Dell and Silver Lake.

Some analysts believe the special committee overseeing the bidding for the company are likely to favour a deal with Michael Dell and Silver Lake if their offer is increased above $15 a share.

Michael Dell is said to be concerned that Blackstone's offer would dismantle the company, and some reports say he is planning to meet with Blackstone to discuss its bid.

Under the Silver Lake deal, Michael Dell would contribute his roughly 16% share of Dell's equity, along with cash from his investment firm MSD Capital, and remain CEO of the company, while Silver Lake would put in $1.4bn.


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