Dell takeover battle: All you need to know

Dell takeover battle: All you need to know
Dell Inc said it received alternative proposals from Blackstone Group LP and Carl Icahn that might be superior to the $24.4 billion offer from founder Michael Dell and private equity fund Silver Lake Partners last month.

Details of the three bids follow.

Silver Lake/ Michael Dell proposal
  • Cash bid is for entire company, valuing Dell at $13.65 per share.
  • Silver Lake committed up to $1.4 billion in equity financing.
  • Michael Dell will roll over 273 million shares of Dell stock, invest up to an additional $500 million in cash.
  • An affiliate of Michael Dell investment vehicle MSD Capital will contribute up to an additional $250 million.
  • Deal will target the repatriation of $7.4 billion cash from abroad.
  • Deal would also be financed by a $2 billion loan from Microsoft Corp and between $11 billion and $12 billion in debt financing from Bank of America Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets.

Blackstone proposal
  • Leveraged recapitalization transaction that values Dell shares at more than $14.25 per share.
  • Shareholders could choose to receive either all cash or stock (subject to a cap).
  • Blackstone anticipates inviting large Dell shareholders to participate in transaction by rolling over their shares.
  • Dell shares would continue to trade on Nasdaq.
  • Received a "highly confident" letter from Morgan Stanley on Blackstone group's ability to raise debt financing for transaction.

Icahn proposal
  • Cash bid for up to 58.1 percent of Dell, valuing the company's shares at $15 each.
  • Shareholders could elect to keep their Dell stock instead of the cash bid.
  • Deal will be funded by $2 billion from Icahn Enterprises, Carl Icahn and affiliates; $7.4 billion of cash currently available at Dell; $5.2 billion in new debt; and $1.7 billion in new factoring receivable facility.
  • Proposal assumes that large shareholders Southeastern Asset Management and T. Rowe Price would agree to remain shareholders in Dell. Icahn and affiliates would be willing to provide $2 billion in additional equity capital if the shareholders do not agree to roll over their holdings.
  • Should there be leftover funding after investors choose to receive cash or remain shareholders in the company, the balance of the funding will be distributed to remaining Dell shareholders as a special dividend.

Copyright Thomson Reuters 2013


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