Dell is going public again

Image Credit Johnathan Weiss  Shutterstock

Image Credit Johnathan Weiss Shutterstock

VMware is the networking software company Dell acquired when it bought EMC.

Meanwhile, VMware will issue an $11 billion dividend, with $9 billion going to Dell.

Dell said it will offer a new class of publicly listed common stock on the New York Stock Exchange following completion of the deal.

The transaction will allow Dell to bypass the traditional IPO process, which would likely have involved grilling by stock market investors over its $52.7 billion debt pile.

The tracking stock was created to help Dell finance its $67 billion purchase of data storage company EMC Corp.in 2016, the largest technology takeover ever at the time and one that almost tripled the company's debt load.

Dell Technologies founder and CEO Michael Dell took his company private almost five years ago after more than two decades on the stock market in a deal worth $24 billion. For each share of Dell Technologies Class V tracking stock, shareholders will receive 1.3665 shares of Dell Technologies Class C common stock - or $109 in cash. It would simplify Dell's current structure, seen by many as overly complicated, and make use of the stock that tracks VMware Inc.

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After the deal, expected to close in the fourth quarter, holders of Dell's tracking stock will own between 20.8 percent and 31 percent of Dell depending on how many investors opt for cash, Dell said.

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

Shares in DVMT, which last closed at $84.58, rose 13% in premarket 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.

Dell's strategy is beginning to pay off, as companies look to one-stop shops to help them manage their IT infrastructure on the cloud. The company went private in order to undertake a massive turnaround plan amid a wildly changing computing market, but now is ready to return as a public entity and as an even stronger force in the Tech sector.

The boards of Dell and VMware have agreed to the transaction and Michael Dell will retain majority ownership of the re-capitalised Dell. Dell had been exploring a reverse merger earlier this year.

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