Dell To Return To Public Markets With Tracking Stock Buyout

Dell to return to public markets with tracking stock buyout

Tech giant Dell Technologies Inc. announced plans to trade publicly again, re-emerging five years after its leveraged buyout as a more diverse leader in computer equipment and software, though one burdened by debt.

Dell said in a filing Monday. The shares, worth about $17 billion as of Friday. Founder Michael Dell took the company he founded in his dorm room private in 2013 with investment firm Silver Lake Management LLC 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.

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 nearly tripled the company’s debt load. The deal for EMC was mostly cash, but the rest was paid through the new security linked to a part of EMC’s interest in VMware. EMC owned a controlling stake in VMware and the rest of VMware is publicly traded, as is the DVMT tracking stock.

Dell said he wants VMware to remain an independent public company in an interview Monday with CNBC. He added that Silver Lake is committed to its investment in Dell despite his past offers to buy out its stake in the company.

Bloomberg first reported earlier this year that Dell was considering subsuming the tracking stock. Other options included a Dell public offering or combination with VMware, Dell said in a January filing. Under closely held ownership, Dell has sought a new direction in a more challenging market for hardware makers, diversifying away from its namesake PCs and closer to software.

“In 2012, people were saying the PC was dead. It wasn’t,” Mr. Dell said in a telephone interview. “Three years ago, people were saying that everything’s going to the public cloud. Turns out that was completely wrong, too.”

Under the terms of the deal, Dell will offer either $109 a share in cash or 1.3665 shares of newly issued Class C stock in itself for each share of the tracking stock, known by its ticker, DVMT. The cash portion of the transaction will come from an $11 billion special dividend that VMware will issue to all its shareholders — $9 billion of which will go to Dell.

“I believe we’ve accomplished what we set out to do in evolving the business,” Mr. Dell said. “But the work of evolving a company is never done.”


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