THE WALL STREET JOURNAL.

By Sharon Terlep, DAVID BENOIT and Shira Ovide

Blackstone Group LP has ended its pursuit of Dell Inc., less than a month after the private-equity firm said it would try to top a leveraged buyout by the computer maker's founder and a rival investment firm.

Blackstone had been putting together a bid for Dell to trump the $24.4 billion offer from founder and Chief Executive Michael Dell and private-equity firm Silver Lake Partners. Blackstone's offer would have kept part of the company in the hands of public shareholders.

Blackstone, in a letter to the special board committee handling the deal negotiations for Dell, cited declining personal-computer sales industrywide as a factor in its decision, along with concerns about declines in Dell's operating income, according to people familiar with the matter. A Blackstone spokesman declined to comment.

A Dell spokesman declined to comment.

The Blackstone team was in Texas last week conducting due diligence on the company, and its review raised doubts about the future of Dell's PC business, said people familiar with the matter.

Blackstone had been studying ways to free up Dell cash that is held abroad without incurring a multibillion-dollar tax bill, according to a person familiar with the company's thinking. It isn't clear if this issue also factored into Blackstone's decision.

Investor Carl Icahn also had said he planned to bid for Dell.

A special committee of Dell board members earlier said it believed both potential counter bids could be superior to the Silver Lake deal and that it would evaluate both offers should either Blackstone or Mr. Icahn present a firm bid.

The halt to Blackstone's rival deal effort leaves Silver Lake and Mr. Dell in a stronger position to push ahead with their offer to buy all of the company's shares not owned by Mr. Dell and his affiliates for $13.65 apiece.

Still, investors hoping for a sweeter offer had pushed up Dell shares above the proposed buyout price, and several large Dell shareholders had agitated against the deal from Silver Lake and Mr. Dell.

Southeastern Asset Managment Inc., Dell's largest outside shareholder, with more than 8% of its stock, was also its most vocal against the buyout, saying the $13.65 share price undervalued the company's stock and the proposed buyout from Silver Lake and Mr. Dell didn't give current shareholders ample chance to participate in any upside of a revival of the company.

Southeastern had been prepared to roll its stake into a Blackstone bid, people familiar with the matter have said.

It is still possible Southeastern would vote against the Silver Lake deal. On Thursday evening, a Southeastern spokeswoman didn't have an immediate comment.

Since Blackstone formally expressed its interest in making a bid for Dell in late March, more evidence emerged of a sinking market for PCs, Dell's largest source of revenue.

Last week, market-research firm IDC said global shipments of personal computers fell nearly 14% in the first quarter from a year earlier.

IDC said it was the worst quarterly drop for PC shipments since it started tracking the data in 1994. Dell shipped 11% fewer PCs than a year earlier, according to IDC.

Just Thursday, Blackstone's president, on the company's earnings call, emphasized the company's commitment to technology-sector buyout deals. Hamilton "Tony" James said, "We're serious about tech. We like the space. It's not a space with as many credible players as some of the other industries."

Blackstone had been in negotiations with Mr. Dell on whether he would roll into their deal the 16% of shares he and his affiliates control, as he is doing with Silver Lake, people familiar with the discussions said. Blackstone's letter to Dell's board thanked Mr. Dell for his cooperation with Blackstone.

The two sides had several meetings, but it remained unclear if they could reach a deal that would leave Mr. Dell controlling the future of his namesake company, a condition he attached to rolling his stake, one of the people said.

Blackstone had also been in talks with other potential CEOs for Dell.

Dell, under a deal struck by the special committee, agreed to reimburse Blackstone for up to $25 million for its work in considering a formal bid.

In 4 p.m. Nasdaq Stock Market NDAQ -1.27%trading Thursday, Dell shares were at $13.95, down 2 cents.

—Ryan Dezember
contributed to this article

A version of this article appeared April 19, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Blackstone Abandons Its Pursuit Of Dell.