Dell gets rival offers, but neither would really take the company private.
FORTUNE — Dell Inc. announced this morning that it received two acquisition bids during its “go-shop” process, and that both “could reasonably be expected to result in superior proposals” to the $13.65 per share offer submitted in February by Michael Dell and Silver Lake Partners. Both deals, however, would include a public equity stub that would seem anathema to Michael Dell — the founder and CEO whose interest in taking Dell private is centered around his disdain for how the company has been treated by public markets.
The first rival offer comes from The Blackstone Group BX , which is working with smaller private equity firms Francisco Partners and Insight Venture Partners. It would pay $14.25 per share for Dell DELL and says that its equity commitments in excess of new equity committed in the Dell and Silver Lake bid. Of course, that’s partially because Blackstone does not yet have any guarantee that Michael Dell would be willing to roll over his shares — although Blackstone hopes that he will do so. That uncertainty underscores how this is an indication of interest rather than a binding bid, since Blackstone wouldn’t commit itself before knowing how much financing is actually required and if it would have majority control — let alone who the company’s future CEO would be.
Blackstone also doesn’t have any debt financing committed but says that it is working with Morgan Stanley MS and is confident it can line up the money. Worth remembering that $2 billion of the original offer comes in the form of a loan from Microsoft MSFT , which is exclusively tied to Silver Lake on the deal (unless Silver Lake lets Microsoft amend the contract). Finally, Blackstone would allow existing Dell backers to choose cash or stock, leading to the aforementioned public stub.
The second bid comes from Carl Icahn, who has slightly modified his original dividend recap plan. He would put upwards of $5 billion in equity toward the deal (including rollover of his existing $1 billion stake) and would “assume” rollover from other large shareholders like Southeastern Asset Management and T. Rowe Price. All of this would get done at a $15 per share price, and also would include a massive public equity stub.
Icahn does not make mention of Michael Dell or his existing equity.
The next step will be public release of a detailed proxy statement from Michael Dell and Silver Lake, laying out a case for why their offer actually is superior at a lower price. That was scheduled for tomorrow or Wednesday, but the Blackstone and Icahn bids may complicate matters (or cause Michael Dell to add a couple quarters to his own bid).
In short, Michael Dell will argue that Dell has proven systemically unable to accurately predict financial performance in the midst of its transition from a PC giant to an enterprise services provider — and that such volatility plays unnecessary havoc with publicly traded shares. So he instead will ask to assume the risk and work to transform the company as a private enterprise. Hard to imagine him signing onto a rival offer that would still require public equity participation — let alone one that may not allow him to maintain control.
One thing we know for certain: This isn’t over yet. Not by a long shot.
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