Blackstone has pulled out of the bidding war for Dell, citing concerns over the health of the PC market and Dell's declining financial position.
In a letter to Dell on Friday, Blackstone said a number of "significant adverse issues" have surfaced since it lodged its $14.25 (£9.35)-a-share offer for the hardware giant on 22 March.
This leaves only a consortium led by Michael Dell and billionaire investor Carl Icahn in the race.
Market watcher IDC recently shook the market by revealing that global PC shipments nose-dived by 14 per cent annually in Q1, the steepest fall since it began tracking the market.
Blackstone said this "unprecedented" decline in PC volumes was inconsistent with its assumption that the market would grow modestly.
The private equity house highlighted the "rapidly eroding financial profile of Dell" as a second issue – since it submitted its bid, the firm has slashed its operating profit projects for its current year from $3.7bn to $3bn.
Although Blackstone said it still believes Dell is a "leading global company with strong market positions", the reasons mentioned above mean it will "likely not pursue this opportunity".
Blackstone's withdrawal paves the way for a showdown between Michael Dell and so-called "activist investor" Icahn in the battle to take Dell off the stock market.
Michael Dell's Silver Lake-backed bid, which some shareholders think is too low, values the firm he founded in 1984 at $13.65 a share, compared with Icahn's $15-a-share proposal.
Stay on top of all the major news and views on gender diversity, which has become a major focal point for our industry in 2018
Distie adds £200m in organic sales to its UK top line in 2017
Lengthy saga set for conclusion, with investor group including Dell and Apple on course to complete $18bn deal