* Blackstone withdrawal removes obstacle to Michael Dell
* Cites industry-wide drop in PC sales, lower Dell earnings
* Michael Dell's $24.4 bln offer could still face opposition
By Greg Roumeliotis and Soyoung Kim
April 19 Blackstone Group LP has ended
its pursuit of Dell Inc, easing the way for founder
Michael Dell and his private equity partner Silver Lake to go
ahead with a $24.4 billion deal to acquire the world's No. 3 PC
New York-based Blackstone pulled out just a month after it
launched a challenge to the billionaire's attempt to take Dell
private. Dell's shares fell 2.2 percent in pre-market trading on
In a letter published by a Dell board committee on Friday,
Blackstone cited an unprecedented 14 percent drop in industry PC
sales in the first quarter of 2013 and a lower earnings forecast
by Dell among the reasons for its withdrawal..
"Since our bid submission, we learned that the company
revised its operating income projections for the current year to
$3.0 billion from $3.7 billion," Blackstone's bidding group
wrote in the letter.
The letter was published by Dell's special board committee,
which is handling all buyout-related matters. Three people
familiar with the matter had previously told Reuters about the
Blackstone and activist investor Carl Icahn, who has taken a
significant stake in the company and opposes Michael Dell's
buyout, had made preliminary offers to the company challenging
the deal with Silver Lake.
Icahn's chances of a successful rival offer are viewed by
analysts and investors as slimmer than Blackstone's, yet the
deal with Silver Lake still faces significant opposition from
some Dell shareholders, including Southeastern Asset Management,
the activist investor that owns 8.4 percent of the company.
Silver Lake declined to comment. Icahn could not immediately
be reached for comment.
Icahn and Blackstone each 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.
Both deal structures involve 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
Dell said on Tuesday that Icahn had agreed not to raise his
stake in the company to more than 10 percent, and that he could
team up with other shareholders on a potential bid for the
personal computer maker.
On the same day, Icahn said in a brief statement that his
latest agreement with Dell did not prevent him from embarking on
a proxy fight.
Dell was regarded as a model of innovation as recently as
the early 2000s but has struggled to make up for a declining
share of the global PC market. The company is now trying to
transform itself into a provider of enterprise computing
services, reducing its reliance on PC sales.
The Financial Times reported Blackstone had pulled out of
negotiations with Dell earlier on Thursday.