Michael Dell on Going Back Under Wall Street's Spotlight

Dell looks set to refloat company and keep control at the same time

Dell looks set to refloat company and keep control at the same time

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

Michael Dell, who now owns 72 per cent of Dell Technologies common shares, struck a deal with the private equity firm Silver Lake to take the company private in 2013 in an effort to reorganize without pressure from public shareholders.

In its latest turn of corporate machination, Dell Technologies has chose 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.

Class V stockholders can choose $109 in cash for each share they hold, or 1.3665 shares of Class C common stock.

A tracking stock is a type of common stock that "tracks" or depends on the financial performance of a specific business unit or operating division of a company rather than the operations of a company as a whole.

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

"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".

As part of the deal, VMware will pay DVMT shareholders an $11 billion special cash dividend and Dell will offer more shares - or cash - to make up the difference.

DVMT has a market capitalization of $17 billion, while that of VMware is about $60 billion after their stock prices increased this year on the possibility of a deal, according to the paper. While it was a private company it acquired the software and storage company EMC, and became Dell Technologies, with its enterprise assets changing to Dell EMC (the name it is commonly referred to now). The company announced a stock swap deal with its software subsidiary VMware that will result in a reorganised tech giant that returns to the stock market, with founder Michael Dell retaining control as chairman and chief executive.

"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 reported consolidated adjusted cash flow of $2.4 billion in its latest quarter, up by a third year-on-year. That meant Dell would be beholden to the whims of public markets, perhaps laden with short-term pessimism over the company's urgent need to find a transition.

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