Dell is going public again after five years as a private business

03 July, 2018, 09:25 | Author: Brooke Harris
  • Dell looks set to refloat company and keep control at the same time

The world's largest private technology company will exchange each share of VMware tracking stock (DVMT.N) 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.

Dell in its early years focused on commercial clients, but that changed in the late 1990s when it garnered a huge following among techies who desired more options in customizing PCs.

"We are excited that public investors will share in Dell Technologies' dynamic value creation with Silver Lake, which has no plans to seek liquidity and remains an enthusiastic long-term shareholder".

Founder Michael Dell took the company he founded in his dorm room private in 2013 with investment firm Silver Lake for about $25 billion, in part to shield the company from public scrutiny as the PC business crumbled and it expanded into software and services. Dell will trade on the New York Stock Exchange after completion of the deal, expected later this year, the company said.

When Dell Inc. closed the biggest technology merger in history almost two years ago, the company's namesake founder said the new entity would enjoy its freedom away from the glare of Wall Street and its obsession with quarterly earnings.

Michael Dell will hold onto his role as chairman and CEO, while Silver Lake will keep its minority stake.

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At time of publication, Dell was trading up 7.7 percent at $91.10, and VMware was up 5.4 percent at $155. The agreement also included EMC's majority stake in VMWare, which now has a market cap of around $50 billion, as well as ownership of Pivotal, SecureWorks, RSA and VirtuStream.

VMWare's board of directors (remember, Dell acquired EMC for $67 billion in 2015) has voted to declare an $11 billion cash dividend pro rata to all VMWare stockholders. The deal was largely in cash, but the remainder was paid via the new security that was linked to a portion of EMC's interest in the VMware business, which provides cloud-infrastructure services.

The transaction represents a premium of 28.9 percent to the closing price of the tracking stock on Friday.

After the deal, VMware shareholders would own between 20.8% to 31% of Dell depending on how many investors opt for cash, Dell said.

Dell has had an interesting track record, as far as its position private and public, over its 34 years of operation.

"Dell is a very different company than it was five years or so years ago".

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