The Sound and the Fury — Dell vs. Hurd

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The board of Dell Inc. (NASDAQ: DELL) set a “go-shop” deadline for one minute after midnight tonight to see if the company could entice a bidder to compete with Dell founder Michael Dell and his private equity partner, Silver Lake Partners. The Wall Street Journal has reported that another private equity giant, The Blackstone Group LP (NYSE: BX) is preparing an offer, which would include former Hewlett-Packard Co. (NYSE: HPQ) CEO Mark Hurd, now co-president at Oracle Corp. (NASDAQ: ORCL) taking the reins of Dell if the Blackstone effort is successful.

Is this a potential 15-round winner-take-all championship bout or perhaps a joint effort dressed up to look like a championship fight? The group led by Michael Dell has an offer of $24.4 billion ($13.65 a share) on the table, so any offer from Blackstone would have to top that. Shares are already trading above $14 on shareholders’ expectations that a higher bid will show up. Activist investor Carl Icahn and another large Dell shareholder, Southeastern Asset Management, think the company is worth more than $20 a share.

Not Blackstone nor any other bidder is likely to come anywhere near $20 a share for Dell. Now, let’s say that Blackstone’s offer comes a buck or two more per share than Dell/Silver Lake and includes Hurd as the new CEO. Michael Dell still owns nearly 16% of Dell Inc.’s stock and, unless he decides to cash out, he is not likely to agree to play second fiddle to Hurd or anyone else. So we might expect a deal where Dell Inc. is run by co-CEOs, one of whom has presided over the rise and fall of his namesake company and the other whose slashing of HP’s workforce endeared him to shareholders.

A truly competitive bid from Blackstone is a longshot. As our title suggests, it’s a tale full of sound and fury, signifying nothing.

Dell’s shares peaked at around $14.40 yesterday after the WSJ story on the possible Blackstone deal. Shares are trading flat at $14.14 in mid-afternoon today, in a 52-week range of $8.69 to $17.15.

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