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New Bids Emerge For Dell

24 March 2013

Computer maker Dell Inc., which was considering a buyout proposal from investment group Southeastern Asset Management Inc. and company founder Michael Dell, now has several bidders vying for its business. On March 25, the company released the following statement:

“As the Board's Special Committee continues to oversee its process, we remain focused on our customers and on providing innovative products and solutions to help them succeed and better compete in the marketplace. Since its founding in 1984, Dell has been dedicated to delivering a best-in-class customer experience and today, the top priority of our more than 100,000 team members is serving our customers around the world.”

Media outlets report that the private-equity firm Blackstone Group and investor activist Carl Icahn are the new bidders, and both bids are significant enough to warrant attention from Dell.

Dell’s original $24.4 billion offer included backing from founder Michael Dell and equity firm Silver Lake Partners. In February, one of Dell’s major shareholders – Icahn-- objected to the buyout, saying the move undervalues the company.

Dell, like many computer OEMs, has been struggling as PC sales have slumped amid the technological upheaval caused by the growing popularity of smartphones and tablets. PC sales in 2012 declined for the first time in 11 years, according to market research firm IHS iSuppli. The proposed $24.4 billion buyout price is 80 percent below Dell's top market value of more than $150 billion at the peak of the dot-com boom 13 years ago. Michael Dell –Dell’s largest shareholder, who holds a 14 percent stake -- is contributing about $4.5 billion in stock and cash to help pay for the deal. The rest of the money would be supplied by the investment firm Silver Lake, loans from Microsoft Corp. and a litany of banks.

Although the loans will burden Dell with debt that could leave the company with less money to invest in innovation and acquisitions, proponents of the buyout say they examined other strategic options before proposing the deal.



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