Infotech Lead America: Blackstone Management Partners has decided to pull out of its earlier plan to buy Dell primarily due to adverse market conditions.
Blackstone, in a statement on Friday, said: “While we still believe that Dell is a leading global company with strong market positions, a number of significant adverse issues have surfaced since we submitted our letter proposal to you on March 22.”
Unprecedented 14 percent market decline in PC volume in the first quarter of 2013, its steepest drop in history, and inconsistent with Management’s projections for modest industry growth; and the rapidly eroding financial profile of Dell have prompted Blackstone to pull out of the buyout talks.
On 10 April 2013 IDC said worldwide PC shipments totaled 76.3 million units in the first quarter of 2013, down -13.9 percent compared to the same quarter in 2012.
According to Gartner, global PC shipments reached 79.2 million units in the first quarter of 2013, a 11.2 percent decline from the first quarter of 2012.
Global PC shipments went below 80 million units for the first time since the second quarter of 2009. All regions showed a decrease in shipments, with the EMEA region experiencing the steepest decline.
“Since our bid submission, we learned that the company revised its operating income projections for the current year to $3.0 billion from $3.7 billion,” Blackstone said.
Dell’s revenue in the third quarter was $13.7 billion, an 11 percent decrease from the previous year as desktop and mobility revenue contracted. Its net income during the period decreased 31 percent to $679 million.
Blackstone Management Partners, Francisco Partners, Insight Venture Partners, and Riverwood Capital are the partners in the talks to buy Dell for an undisclosed sum.
Microsoft’s $2 billion loan to assist Dell to go private in $24.4 billion deal
In February, Dell said Microsoft would offer $2 billion loan for a deal between Michael Dell, founder of Dell, and investment firm Silver Lake, in the management buyout of Dell for $24.4 billion.