It looks as if Michael Dell isn’t going to get his company back without a fight after all. While his bid with Silver Lake Partners was the first, it isn’t the last. Now, private equity fund Blackstone and "entities associated with investor Carl Icahn" have emerged as rival bidders to buy the company back from shareholders and take it private.
Obviously, this could represent something of a blow to Dell himself, particularly as an announcement from Dell’s board of directors’ special committee revealed that both the newer offers "could reasonably be expected to result in superior proposals, as defined under the terms of the existing merger agreement".
Meanwhile, Dell the company released a separate statement immediately after the announcement of Blackstone and Icahn’s offers stressing it remained "focused on our customers and on providing innovative products and solutions to help them succeed and better compete in the marketplace". Sadly for Dell the company, everyone else is focused on the rival bids and the drama that comes with them.
One of the big differences between the Michael Dell/Silver Lake Partners bid and the Blackstone and Icahn proposals is that the newer offers envisage keeping some of the company public for the benefit of shareholders that wish to retain their stake in the business. This addresses concerns raised by a few high profile shareholders who complained about the company going entirely private.
According to the same announcement, Michael Dell has told the committee of "his willingness to explore in good faith the possibility of working with third parties regarding alternative acquisition proposals". This suggests he’s making sure he is not automatically left out in the cold if one of the other bidders wins the war to take Dell private.
Further complicating matters is that those two new bidders might well become one as Icahn revealed he has opened preliminary talks with Blackstone. If they combined their bid or if Icahn backed Blackstone’s, it could make things easier for everyone involved, bringing it down to a straight battle between Dell/Silver Lake and Blackstone.
Whatever happens, Michael Dell will obviously want to retain his presence at the business. The difficulty is that if he becomes too heavily identified with the Silver Lake bid and that offer is defeated by the Blackstone proposal, it could be hard for him to maintain his influence. Whatever the reason for rejecting his offer (whether it be better shareholder value or the opportunity to keep part of the company public), if Michael Dell’s bid were to lose, it would diminish his influence and authority within the organisation he founded.
I know it’s perfectly possible for him to remain at the company in that scenario, but it’s hard to see how he could continue in his role as CEO working for Blackstone or Icahn. To my mind, he would be seriously weakened. The man in charge of his own destiny who decided to take Dell public to grow the business and enable investors to share in its success would be replaced by the man who not only failed to take it back but ended up giving it to somebody else.
It would be ironic if a process that started as a way for Michael Dell to gain more control over the company he founded was to end with him losing all control over it.
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