On Monday, March 25, Dell said that it has received two alternative acquisition proposals: one submitted by a group affiliated with a private equity fund managed by Blackstone, and the other by entities affiliated with Carl Icahn.
The news arrived after company founder and CEO Michael Dell and Silver Lake Partners finally reached an agreement and presented a $24.4 billion offer to take the struggling PC maker private. However, insiders have claimed that current shareholders aren't impressed with the deal, believing that the company is worth more than the $13.65 per share that Michael Dell and his financial backers are offering.
With a hint of discouragement in the air, Blackstone and Carl Icahn presented a motivator. Dell's Special Committee said on Monday that both proposals could be expected to result in superior proposals, as defined under the terms of the existing merger agreement. This group plans to continue negotiations with both.
Meanwhile, feeling the possible heat, Michael Dell said he is willing to explore the possibility of working with third parties regarding alternative acquisition proposals.
According to the Blackstone proposal, shareholders who wish to cash in their stock will have the opportunity to receive greater than $14.25 in cash per share for all of their shares. Those who wish to stay with the company after the acquisition will have the opportunity to remain as shareholders and receive shares (subject to a cap) valued in excess of $14.25. Shares will continue to be publicly traded on the Nasdaq, Blackstone said.
As for Carl Icahn's acquisition proposal, he already owns approximately 6 percent of Dell shares. Dell shareholders can receive either shares of the "Surviving Company" on a one-to-one basis with their current holdings, or an aggregate of up to $15.65 billion in cash payable at a rate of $15 per share. His company is also offering an additional $2 billion of cash equity financing, and allowing Dell access to the $7.4 billion in cash that the struggling PC maker still has stashed away.
Both propositions mean a purchase of a controlling stake in Dell, not a complete buyout. This would mean the "surviving company" could offer shares for public trading, a complete 180-degrees from the direction Michael Dell wants to take.
"We are gratified by the success of our go-shop process that has yielded two alternative proposals with the potential to create additional value for Dell shareholders," said Alex Mandl, Chairman of the Special Committee. "We intend to work diligently with all three potential acquirers to ensure the best possible outcome for Dell shareholders, whichever transaction that may be."
Dell's announcement, along with both proposals, can be accessed here.