Blackstone’s withdrawal from the $24.4 billion Dell buyout deal signals a very negative note

In what comes as quite a shock, Blackstone Group, has pulled out of bidding for the $24,4 billion buyout offer of Dell amid concerns of a worsening PC slump

April 25, 2013

By Bryn Evans, MD of Inkworks

In what comes as quite a shock, private equity firm, Blackstone Group, has pulled out of bidding for the $24,4 billion buyout offer of Dell amid concerns of a worsening PC slump, and possible indications that Dell’s own projections for future growth are way off target.

Blackstone’s withdrawal cannot be seen as good news for the image of Dell. That’s because it is very rare for a private equity firm to drop out of a buyout deal – unless they get involved in a heavy price bidding war, or if they find some nasty hidden morsels while conducting a due diligence of the target company.
The high-powered team at Blackstone has been scrutinizing Dell and is obviously not happy with what it sees. It highlighted the “the rapidly eroding financial profile of Dell” as a cause for concern.

The bottom-line is that history reveals that Blackstone very seldom backs out of deals. The fact that it has walked away from Dell must raise significant concerns for the investment market – and for Dell itself. Michael Dell, the founder and CEO of Dell, has been seeking to de-list his company in a massive leveraged buyout headed by Silver Lake Management. He was also considering Blackstone’s counter-proposal.