Dell confirmed it had received alternative buyout offers from Blackstone and Carl Icahn, following a $24.4 billion agreement last month to be taken private by its founder and private equity firm Silver Lake.
The company said its special committee has determined that "both proposals could reasonably be expected to result in superior proposals."
Icahn and Blackstone put in preliminary bids late last week. The new offers could potentially upset the plans of the No. 3 PC maker's founder, Michael Dell, and private equity firm Silver Lake to take Dell private.
If the committee determines one or both of the offers are superior, Silver Lake and Michael Dell will get one shot at revising their original bid. Unlike most other go-shop processes, where the original bidders get several chances to match rival bids, Dell has given its founder and Silver Lake the right to do so only once.
Icahn has offered $15 per share for 58 percent of Dell, while Blackstone has proposed paying more than $14.25 per share, the source said. The Silver Lake group has agreed to buy all of Dell for $13.65 per share.
One issue before the special committee would be how to compare the three proposals. Both Blackstone's and Icahn's proposals envision that a portion of Dell's stock will remain publicly traded, which raises questions about how that would be valued.
Dell said its special committee, which consists of four independent directors, will continue negotiations with both Icahn and Blackstone.
The unexpected rival bids for Dell throw the future of the PC-maker into question. A "go-shop" period—during which the target company actively looks for rival offers—for a deal of this size rarely yields competing offers. The bids now could potentially turn the sale of Dell into a three-horse race, which could drag out for months.
It also could threaten the future of Michael Dell, who founded the technology giant at the age of 19 with just $1,000. Under the Silver Lake plan, he planned to contribute his roughly 16 percent share of Dell's equity to the deal, along with cash from his investment firm MSD Capital, and to remain CEO of the company. Silver Lake is putting up $1.4 billion in the deal.
The Silver Lake group has no plans to increase or amend its offer until Dell's special committee comes out with a ruling on the rival proposals, two sources close to the matter said late on Sunday. They said for now the buyout firm and Michael Dell planned to move forward with their current deal.
But the current plan to take the company private has come under attack from several high-profile Dell shareholders such as Southeastern Asset Management and T. Rowe Price.
The shareholders have said that his offer undervalues the company and pledged to vote against the deal, which requires a majority of shareholders, excluding the founder, to pass.
Brian Marshall, an analyst at ISI Group said in a report on Sunday that he did not expect the Silver Lake group to raise its offer meaningfully above the rival bids, "given significant challenges facing the PC business and a long transformation ahead."
Dell's shares closed at $14.14 on Friday.