The Blackstone Group is withdrawing its bid to purchase Dell in a private equity buyout, according to a report.
Blackstone had been considered a serious bidder for Dell, going so far as to recruit potential CEO candidates if current Dell CEO Michael Dell did not remain with company under Blackstone's ownership.
The private equity firm is bowing out after discovering that Dell's PC business is deteriorating faster than it has originally anticipated, The Wall Street Journal reported Thursday night, citing people involved in the negotiations.
Last week, both IDC and Gartner announced that first-quarter PC sales had fallen by a double-digit percentage compared with the year-ago quarter. As a result, several PC-related stocks tumbled April 11, including Hewlett-Packard, AMD, Microsoft and Intel. Dell's stock fell only 14 cents that day as investors apparently remained confident that Blackstone was still interested in buying the company.
Dell's stock has been trading above the $13.65 per-share offer agreed upon to buy Dell in early February. Investors were confident that a better deal would be negotiated with Silver Lake or another company following the go-shop period for alternative bids.
Aside from Blackstone, the only other serious bidder to emerge as an alternative to the $24.4 billion deal with Silver Lake Partners was Carl Icahn and Icahn Enterprises. Earlier this week, Icahn and his affiliate organizations agreed to limit the amount of Dell shares they would purchase in exchange for an opportunity to more easily pursue improved offers to acquire part of Dell.
It's now unclear what alternatives might be available other than the Silver Lake deal.
In its most recent fiscal quarter, Dell reported an 11 percent decline in sales, including a 14 percent drop in PCs.
Dell shares closed Thursday at $13.95, down 2 cents per share.
PUBLISHED APRIL 19, 2013