Dell Deals Another Dandy, Going Public Once Again

Dell confirms plan to return to public markets

A logo of Dell Technologies is seen at the Mobile World Congress in Barcelona, Spain February 28, 2018.

Dell Technologies on Monday confirmed that it had reached an agreement to take the company public again on the New York Stock Exchange as part of a share swap with its DVMT VMware software business tracking stock. VMware is the networking software company Dell acquired when it bought EMC.

In a move to remove a complex layer of its business, Dell 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.

The transaction "has merit, after notable financial and operational performance gains since Dell went private", said Anand Srinivasan, technology analyst at Bloomberg Intelligence, adding that "Dell's stock issue comes with high expectations, particularly versus Hewlett Packard Enterprise and NetApp".

The transaction represents a premium of 28.9 percent to the closing price of Dell's tracking stock on Friday. The company also paid off $13 billion in debt stemming from it EMC tie-up.

The cash component of the offer will be financed by a one-time $11 billion special dividend that VMware will pay out pro-rata to its shareholders. While the tracking stock that would facilitate the change has doubled in value, Michael Dell has previously stated a preference for being a private company - which Dell has been since 2013. The stock was up 10 percent at $93 in afternoon trading.

"Unprecedented data growth is fueling the digital era of IT, and we are uniquely positioned with our portfolio of technologies and services to enable the digital, IT, security and workforce transformations of our customers", CEO Michael Dell said.

VMware shareholders will choose between receiving cash or stock in the transaction. The merger of Dell and EMC was the largest tech merger in history making Dell Technologies the largest privately held tech company. Dell had been exploring a reverse merger earlier this year.

The Wall Street Journal had reported earlier that Dell planned to buy the DVMT shares and could announce those plans as soon as Monday.

"I am proud to lead this great company into its next chapter as we continue to evolve and grow to the benefit of our customers, partners, investors and team members", said Dell founder and chairman Michael Dell, who owns 72 percent of Dell Technologies' common stock.

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