Dell makes move to go public again after months-long review

Andrew Cummings
July 3, 2018

The world's largest private technology company owns 80 percent of VMware and issued the tracking stock in 2016 to fund its purchase of EMC Corp, then the biggest stakeholder of VMware.

Dell will exchange each share of VMware tracking stock for 1.3665 shares of its Class C common stock, or $109 per share in cash for a total cash consideration of not more than $9 billion.

Michael Dell, who will continue on as CEO and chairman after the deal, said he remains committed to the company's long-term strategy and the independence of VMware.

In its latest turn of corporate machination, Dell Technologies has made a decision to return to the public market via a cash and share-swap deal that's meant to help the company boost revenue and raise funds.

Dell said it will list its Class C shares on the New York Stock Exchange following the completion of the deal that will eliminate its tracking stock.

A report by the Wall Street Journal suggests that Dell could be on the verge of becoming a public company once again. It would simplify Dell's current structure, seen by many as overly complicated, and make use of the stock that tracks VMware Inc. The stock was up 10 percent at $93 in morning trading, while VMware shares rose 7.2 percent to $157.56.

Once the deal closes, DVMT shareholders (Class V shareholders) will own between 20.8 percent and 31 percent of Dell depending on cash election amounts.

The tracking stock has almost doubled in value since it was issued, closing Friday at $84.58.

The boards of Dell and VMware have agreed to the transaction and Michael Dell will retain majority ownership of the re-capitalised Dell.

Michael Dell has turned to dealmaking to transform his company from a PC manufacturer into a broader seller of information technology services to businesses, ranging from storage and servers to networking and cyber security. Until now, investors have gained exposure to Dell by purchasing shadows of shadows of the company. Bloomberg first reported earlier this year that Dell was considering subsuming the tracking stock. Other options including a combination with VMware itself were reportedly considered but ultimately, all parties involved settled on going public once again. "The company paid down 25 percent of its $42 billion debt in two years and cash flow is strong".

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