Michael Dell is about to find out if otherbidders think his company is worth more than he does.
The answer could come Friday, which marks the end of a45-day period that Dell Inc.'s board of directors settled on to allow foroffers that might top a Feb. 5 agreement to sell the personal computer maker toCEO Michael Dell and a group of investors for $24.4 billion.
With the deadline looming, buyout specialist BlackstoneGroup is emerging as the most likely candidate to trump the current bid of$13.65 per share.
Blackstone is so intrigued with the prospect of owning Dellthat the firm has been courting former Hewlett-Packard Co. CEO Mark Hurd to runDell if it decides to mount a hostile takeover attempt, according to a personfamiliar with the situation. The person asked not to be identified because thediscussions between Blackstone and Hurd are considered confidential.
Several other buyout scenarios tying Blackstone to Dell havebeen leaked to the media this week, another indication that the New York firmis mulling a bid that could scuttle the debt-laden deal that the companyreached with Michael Dell and Silver Lake Partners.
Dell Inc. says Friday's deadline for competing offers couldbe extended if its board believes other suitors would benefit from more time toexamine Dell's books and hash out other details. The company, which is based inRound Rock, Texas, has promised to provide extensive details about the salesprocess in regulatory documents that are supposed to be filed next week.
Although there is much rumor and speculation, many investorsare convinced a higher bid is in the works. That's why Dell's stock price hasremained above $14 for the past two weeks. The shares fell 19 cents Thursday toclose at $14.14. Some analysts have even predicted Dell ultimately will be soldfor $15 to $16 per share.
Southeastern Asset Management, Dell's second largestshareholder after Michael Dell, has asserted the company is worth closer to $24per share.
For its part, the four-member board committee thatnegotiated the current deal maintains it's selling Dell at a fair price —onethat reflects the dimming prospects for the PC industry as more technologyspending shifts to smartphones and tablet computers.
The upheaval is siphoning revenue away from both Dell, theworld's third largest PC maker, and HP, the top PC maker. Both companies aretrying to adapt by making more tablets and diversifying into more profitableareas of technology, such as business software, data analytics and storage.
The rivalry between Dell and HP makes Blackstone'sflirtation with Hurd a tantalizing twist.
HP widened its lead over Dell during Hurd's five-year reign,but the company parted with its former CEO under acrimonious terms in August2010. Hurd resigned after facing allegations of sexual harassment against an HPcontractor. HP found no evidence of harassment, but concluded that Hurd hadfiled inaccurate expense reports. Since Hurd's departure, HP has struggled andits stock price has been cut in half in a slide that has erased about $45billion in shareholder wealth.
Hurd, 56, began working as president of business softwaremaker Oracle Corp. shortly after leaving HP. He is given every indication thathe is happy with his current job, which could lead to a promotion to succeedhis close friend, Larry Ellison, as Oracle's CEO. Ellison, 68, hasn't set atimetable for stepping down. Analysts nevertheless see Hurd and Safra Catz,Oracle's chief financial officer, as the leading candidates to replace Ellison.
Oracle declined to comment Thursday. Blackstone didn'treturn phone calls.
Blackstone is only interested in bringing Hurd to Dell if itcan't negotiate a deal on friendly terms, should it decide to pursue a bid,said the person familiar with the situation. The easier path would requireBlackstone to win the cooperation and financial participation of Michael Dell,who is contributing about $4.5 billion in cash and stock to the deal that heworked out with Silver Lake. Under that agreement, Michael Dell would remainCEO of a company that would become privately held for the first time in 25years.
Blackstone also has discussed the possibility ofSoutheastern Asset contributing its 8.4 percent stake in Dell to a competingbid, according to The Wall Street Journal, which cited anonymous peoplefamiliar with the matter.
Other Blackstone maneuvers under consideration would focuson buying just a part of Dell. Blackstone might try to buy Dells' financialservices division in a partnership with TPG, another buyout firm, or GeneralElectric Co.'s lending arm, according to the people who talked to the Journal.Dell's financial services division lends money to customers who buy itsproducts.
Another Dell shareholder, billionaire investor Carl Icahn,is pressing the board to forget about selling the company and paying a one-timedividend instead. In a letter to Dell's board earlier this month, Icahnproposed a dividend of $9 per share that would require Dell to take on billionsof dollars in additional debt. Shareholders would profit further if Dell isable to engineer a turnaround that drives up the stock price.
Michael Dell believes he will be in a betterposition to overhaul the company if he no longer has to worry about WallStreet's focus on profit fluctuations from one quarter to the next.