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On Monday, backroom negotiations were supposed to start after Dell Inc invited investor Carl Icahn and Blackstone Group to make offers, according to Reuters. There were some attempts at alliances forming that would have opposed leveraged buyout plans from equity firm Silver Lake and the founder of the company, Michael Dell.
The largest independent shareholder of Dell, Southeastern Asset Management, is against the Silver Lake plan. It also said it was happy with Icahn and Blackstone’s proposals, saying they give “shareholders the opportunity to continue to participate in the company’s future prospects, while also providing a higher cash component for shareholders who choose to exit their investment.”
Icahn’s plan will pay $15 per share for 58 percent of the company. Blackstone has said that it could pay more than $14.25 per share. For all of Dell, Silver Lake said it could pay $13.65 per share.
“Given the wide range of estimated values for Dell shares, if all else is nearly equal, we believe a proposal is superior if it allows investors who want to remain invested in Dell the opportunity to do so,” said Bill Nygren, co-manager of the Oakmark Fund, which is an investor in Dell.
“We continue to believe a higher bid than the current $13.65 per share offer will likely be offered but, based on our assumptions, a $15 per share bid may be a threshold,” Wells Fargo Securities analyst Maynard Um said in a note.
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“We believe a higher Silver Lake/Dell bid might still be a more attractive and strategic option, assuming information regarding the public stub and financial services sale is accurate,” he said.
Should Blackstone take over the company, they have begun pursuit of Oracle Corp President Mark Hurd to run Dell.
According to sources, Dell cut its internal forecast for fiscal 2013 operating profit to $3 billion, which is a decrease from $3.7 billion it originally predicted.
