Flipping 'ell, Dell! IT giant preps to go public again, files its homework

Five-year private ownership period to end in Q4, according to paperwork sent to the SEC

VMware CEO Pat Gelsinger and Dell CEO Michael Dell at VMworld 2016
VMware CEO Pat Gelsinger and Dell chief Michael Dell

Dell Technologies Inc is proposing to become a publicly traded corporation again, according to a filing lodged with America's financial regulator the SEC this morning.

At the weekend, the WSJ reported the possibility that Dell would attempt to swap privately held shares in itself with the "tracking stock" it created when buying EMC – and the SEC filing and a Dell missive have just confirmed the news. El Reg outlined the background of US tax law changes here just a few hours before.

Dell went private in 2013, in a $25bn transaction with Silver Lake private equity business, with the intent of reshaping the business for the long term in ways that would not have been compatible with the quarterly reporting burden needs of public ownership, and consequent dependency on stock values driven by the reports.

Dell bought EMC in 2016 for $67bn, gaining a dominant position in enterprise storage and hyper-converged infrastructure systems. It inherited EMC’s 82 per cent ownership of VMware and created a publicly traded tracking stock, with the DVMT ticker, that follows the performance of VMware.

In January this year it became apparent Dell was considering a return to public ownership with VMware involvement.

Now, in a complex proposed transaction, VMware will pay an $11bn special dividend to all its shareholders, meaning Dell will receive a pro-rata share of some $9bn. Dell will use proceeds from this dividend to pay out its tracker holders this cash. The holders could exchange their tracking stock for shares in Dell, Class C Common Stock at a 1:1.3665 ratio, or $109/share in cash. The transaction is hoped to complete in the fourth quarter of 2018.

The boards of Dell and VMware have agreed to the transaction and Michael Dell will retain majority ownership of the re-capitalised Dell. ®




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