Blackstone Group L.P. (BX), in a letter to the special board
committee handling the deal negotiations for Dell Inc. (DELL),
cited declining personal-computer sales industry-wide as a factor
in its decision to pull out of its bid for Dell, along with
concerns about Dell's falling operating income, according to people
familiar with the matter.
The letter thanked Founder Michael Dell for his cooperation with
Blackstone.
Two people involved in the deal said Blackstone's letter,
received Thursday, wasn't expected but nor was it a shock, as
activity had quieted in recent days.
The development is a potentially disappointing one for Dell
shareholders, who stood to benefit from a bidding war. Blackstone
had been putting together a bid for Dell to top the offer from
founder Michael Dell and private-equity firm Silver Lake Partners.
Blackstone's offer would have kept part of the company in the hands
of public shareholders.
Southeastern Asset Management Inc., Dell's largest outside
shareholder with more than 8% of its stock, was most vocal against
the buyout, saying the $13.65 share price undervalued the company's
stock. It also said Mr. Dell and Silver Lake's deal didn't give
current shareholders ample chance to participate in any upside of a
revival of the company.
Southeastern had been prepared to roll its stake into a
Blackstone bid, people familiar with the matter have said. It is
still possible Southeastern will vote against the Silver Lake
deal.
The Blackstone team was in Texas last week conducting due
diligence on the company, and its review raised doubts about the
future of Dell's PC business, said people familiar with the
matter.
On Thursday evening, a Dell spokeswoman didn't have an immediate
comment.
Write to David Benoit at david.benoit@wsj.com
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