Blackstone Group has given up its bid for Dell, less than a month after the private-equity fund manager said it was planning to top an offer from founder Michael Dell and private-equity firm Silver Lake Partners, according to news reports.
In the so-called "go-shop" period for alternative bidders to make their offers, Dell received two counter-offers related to its plans to go private, with bids coming in from Blackstone and entities associated with investor Carl Icahn. It is not clear whether Icahn's bid still continues.
A special committee had concluded that both offers "could reasonably be expected to result in superior proposals, as defined under the terms of the existing merger agreement." The committee intended to continue negotiations with both Blackstone and Icahn.
But Blackstone's investors are said to have had reservations on the deal, and had concerns that the stock market had already evaluated Dell fairly, The Financial Times reported, quoting people familiar with the matter.
Blackstone management was also concerned about the ability to withdraw from a Dell investment profitably, according to the newspaper's sources.
Blackstone in tandem with Francisco Partners and Insight Venture Management said in March they were prepared to enter into a definitive agreement to acquire Dell. Shareholders who wished to receive cash would receive more than US$14.25 in cash per share for all of their shares, while shareholders who wished to stay invested in the company would have the opportunity to remain as shareholders and receive shares (subject to a cap) valued in excess of $14.25. The shares would continue to be publicly traded on Nasdaq.
The offer was claimed to be a superior proposal to the $13.65 cash purchase price agreed to in the proposal by Michael Dell and Silver Lake. Dell shares closed Thursday at $13.95, valuing the group at $24.4 billion.
Blackstone did not immediately respond to a request for comment. The investors are likely to have been also influenced by troubles in the PC market.
On Tuesday, Intel reported a drop in profits and revenue for the first quarter, after research firms reported a slump in the PC market. First quarter PC shipments totaled 76.3 million units, down by about 14 percent, compared to the same quarter last year, according to research firm IDC. Despite its diversification into software and services, PCs still account for a significant share of Dell's revenue.
Blackstone, in a letter to the special committee handling the negotiations, is said to have cited declining PC sales as a factor in its decision, besides concerns about declines in Dell's operating income, The Wall Street Journal reported, citing people familiar with the matter.