Blackstone Group pulls Dell buyout offer; cites drop in PC sales

In February, Dell announced plans to turn itself back into a privately run company via a $24 billion leveraged buyout, financed in part by a $2 billion cash investment from Microsoft. In March, the Blackstone Group gave a preliminary offer to Dell's special committee that, in theory, could have been worth more than what Dell was willing to give to shareholders.

Today, the Blackstone Group announced it has withdrawn its offer to acquire Dell. In a press release, the investment group reprinted a letter sent to Dell, stating that a number of things have changed since the Blackstone Group launched its bid for Dell. The group cited the drop in overall PC shipments as one reason, along with the "rapidly eroding financial profile of Dell." The letter claimed Dell recently revised its projected income for the current year to $3.0 billion, down from $3.7 billion.

Dell still has a possible alternative bid to consider from billionaire Carl Icahn. This week, Icahn signed an agreement with Dell promising not to acquire more than 10 percent of Dell's stock while the company gives his offer further consideration. Icahn's offer would pay $15 a share in exchange for acquiring 58.1 percent of the company.

Source: Blackstone Group press release | Image via Dell

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8 Comments

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Its a really risky time to be looking at buying a PC manufacturer, even one with the reach of Dell. This story makes perfect sense to me. An investor is looking to buy a company with a bright future, that is not the case right now with PC sales in decline and nothing really positive happening with a Wintel tablet offering.

May be they read Dell will continue to sell surface RT even though that is flop product. Who in his right mind will invest in a company who has clear goal to loose money. Good job for the bidding party as it seems they have higher financial literacy than management at Dell.

the world is in crisis if you havent noticed, so there is your main reason, apart things get more expensive, more things to buy so when people have to buy a PC they must really thing if they need a PC now or it is good enough for a few years more

Doesn't this sort of ignore the fact that say, Lenovo is increasing sales?

Seems like wasted opportunity.. but what do I know. IBM is having a tough time, perhaps some companies are just to big and slow..

spudtrooper said,
Doesn't this sort of ignore the fact that say, Lenovo is increasing sales?

Seems like wasted opportunity.. but what do I know. IBM is having a tough time, perhaps some companies are just to big and slow..


Lenovo sales were up in the US but dropped Worldwide; besides as others have already pointed out private equity companies look for short term investments, they do not want to have money locked in long terms investments and risk to miss other short terms opportunities in the near future; they are very speculative in nature.

This is an odd situation, considering that the consumer side of Dell's business is smaller than its business to business (enterprise) operation.

Sure consumers have reduced the number of PC's they're purchasing. For those who use their PC primarily to browse the Internet and check email, a tablet isn't a bad solution. That doesn't mean that Dell isn't offering solutions for these people. They are, and as Win 8 develops further, I expect in time, it will become a large portion of the market.

For a business however, there are few situations where a tablet is a suitable substitute for a PC. How many of us use a tablet for their primary device at work? They work great to augment a PC, but that's about the most it currently do -- with the exception of dockable Win 8 tablets. I believe they can replace a PC or laptop, but I don't see Android or IOS fitting the bill quite as readily.

Also, portable devices have no impact on servers, storage, etc.

Edited by ahinson, Apr 19 2013, 4:03pm :

ahinson said,
This is an odd situation, considering that the consumer side of Dell's business is smaller than its business to business (enterprise) operation.

Private equity firms need a quick cash-out. They cannot tie up their money for an extended period of time.

This is why they reacted so negatively to the deterioration in PC sales. They cannot wait for long-term success, or for a turnaround. They must get their money back -- plus profit -- in 3-4 years.

Capitalism at its finest ...