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Private Equity Doesn't Want to Go Down With a Sinking Dell

Alex Planes
April 19, 2013

Dell (NASDAQ: DELL) is becoming rather adept at playing "Let's Not Make a Deal" lately: Multiple machinations to go private have produced a nice pop for last year's shareholders -- but little in the way of an actual buyout. Blackstone Group (NYSE: BX) is apparently out of the buyout race, its $14.25 per-share offer now replaced by founder Michael Dell's $13.65 per-share offer as the best deal on the table. Dell stock is down 3.7% on the news.

Super investor Carl Icahn of Icahn Enterprises (NASDAQ: IEP) has presented his own $15 per-share offer, but this would keep Dell public while Icahn acquired up to 58% of the company's outstanding shares. Icahn already owns 10% of Dell's shares, and Icahn loyalists hold another 5%. He looks poised to raise that stake significantly over the next few trading days: Icahn Enterprises has been cleared to bypass the standard waiting period to raise an investor's stake up to 25%. Icahn now presents a significant roadblock to the Dell buyout, as his long history of activist investing portends a fight for control.

Source: Flickr user Sarah Baker.

What's next for Dell and its shareholders? Michael Dell's offer is barely a premium over the company's current price, but investors may want to heed Blackstone's warning, which was published this morning as news of the firm's withdrawal leaked.

You can probably guess what it says, but in case you haven't been paying attention