Dell's bidders plan for computer maker's future without founder

Spur debate over whether the company would be better off without the entrepreneur who founded it three decades ago

Blackstone Group LP and billionaire Carl Icahn are offering to buy Dell Inc without retaining Michael Dell as chief executive officer, spurring debate over whether the personal-computer maker would be better off without the entrepreneur who founded it three decades ago.

Dell said yesterday that it has received proposals from Blackstone and Icahn that may be superior to a $24.4 billion buyout plan from Silver Lake Management LLC and Michael Dell.

As CEO, Dell oversaw the company's rise to the top of the PC industry, yet failed to prepare it for new challenges in mobile technology and high-margin businesses services. While Dell's 15.6 per cent ownership stake gives him leverage to negotiate a top role, the company could benefit from new leadership that can accelerate efforts to add growth, said Erik Gordon, a business professor at the University of Michigan.

"Michael is no longer essential to Dell," Gordon said. "His attractiveness as a partner to a buyer is the size of his ownership stake. If you are willing to take less than total control, you don't need him as much."

Blackstone invited the executive to use his equity to participate in the transaction, which it's pitching as a leveraged recapitalisation that gives investors a chance to participate. Still, the firm's proposal doesn't include Michael Dell as CEO, people with knowledge of the matter said. Icahn also doesn't intend to keep Dell on as CEO, according to people familiar with his planning.

Dell rose 2.6 per cent to $14.51 at the close yesterday in New York, the highest since May and 6.3 per cent more than the $13.65-a-share offer from Michael Dell and Silver Lake, outlined on February 5.

Blackstone proposal
Blackstone's plan values Dell at more than $14.25 a share, while Icahn would pay $15 a share in cash for as much as 58.1 per cent of the stock, Dell said yesterday in a statement that included their offers. Under both plans, some shares may continue to be publicly traded.

Blackstone, which has teamed up with Francisco Partners, a San Francisco-based technology-oriented buyout shop, and New York-based venture firm Insight Venture Partners, said it plans to fund the transaction with a combination of equity and debt financing, in addition to using Dell's cash and equivalents.

The Blackstone plan also has envisioned a sale of certain assets, such as the Dell Financial Services business, people have said.