Blackstone Withdraws from Dell Deal – Icahn Still in the Ring

First, there were three. Now, there are two. Reuters reported Friday that The Blackstone Group L.P. BX has withdrawn its offer to buy Dell DELL. This leaves founder Michael Dell and his private equity partner, Silver Lake Partners, in the driver’s seat.

Activist investor Carl Icahn of Icahn Enterprises, L.P. IEP, becomes more of a “back seat driver” given the fact that many analysts and investors view Icahn’s chances of a successful takeover bid slimmer than Blackstone’s.

According to the Associated Press, Blackstone and others involved in the bid sent a letter to Dell cited a steep slump in PC shipments and Dell’s eroding financial picture prompted them to withdraw.

Dell says buyout specialist Blackstone Group is ending a bid to buy the slumping computer maker, less than a month after pitching a plan to best an offer from the company's CEO and founder.

The letter cited a 14 percent drop in PC shipments in the first quarter and the fact that Dell has lowered its operating income forecast to $3 billion from $3.7 billion in the time since Blackstone first submitted its bid.

READ: The Latest PC Data Looks like a Typo, But It's Not

The battle for control of the Round Rock, Texas, computer maker isn’t over, however. Key Dell shareholders, like Southeastern Asset Management, which owns 8.4 percent of the company, are unhappy with the Michael Dell/Silver Lake Partners $24.4 billion/$13.65 a share offer.

With Blackstone out and Icahn’s chances of success viewed as slim, the deal with Silver Lake seems more likely than it did before the latest news.

While both Icahn and Blackstone had offered alternative bids that would keep the company public, in contrast to Silver Lake’s offer which would see Dell go private, those offers would also saddle the company with considerable debt.

Icahn had proposed paying $15 per share for 58 percent of Dell. Blackstone had said it would pay more than $14.25 per share for the whole company.

Dell, in the Reuter’s report, said that Tuesday Icahn agreed not to raise his stake in the company to more than 10 percent. He indicated that could team up with other shareholders to make his bid. Icahn also said in a statement that his latest agreement with Dell did not prevent him from launching a Proxy fight.

Meanwhile, ZeeNews India reported Thursday that the Competition Commission of India (CCI), the country’s fair trade regulator has approved the Michael Dell/Silver Lake buyout, saying the deal will not affect the competitive landscape in the Indian market.

Any M&A deal involving businesses in India requires clearance from CCI. While Michael Dell has no business in India, Silver Lake does, prompting the need for CCI clearance.

In early trading Friday, Dell shares were down over 3 percent at $13.48

As of this writing, Jim Probasco had no position in any mentioned security.