Dell Is Going Public Again in $21.7 Billion Deal

Logo of Dell Technologies is seen at the Mobile World Congress in Barcelona

Logo of Dell Technologies is seen at the Mobile World Congress in Barcelona

Earlier this year, Dell Technologies said it was undergoing a significant strategic review and might enter the public sphere again, while potentially buying the rest of business software provider VMware that it didn't already own.

The cash component of the offer will be financed by a dividend that VMWare will pay out to its shareholders, the people said. Dell is still losing money (to the tune of around half a billion dollars last quarter), but those losses are narrowing.

As part of a $21.7 billion agreement announced Monday, the PC and data storage company is offering to exchange tracking stock for a new class of common shares.

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.

A report by the Wall Street Journal suggests that Dell could be on the verge of becoming a public company once again.

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 * a target="_blank" href="https://searchwww.sec.gov/EDGARFSClient/jsp/EDGAR_MainAccess.jsp?search_text=*&sort=Date&formType=1&isAdv=true&stemming=true&numResults=10&queryCo=Dell%20Technologies&numResults=10" *SEC filing and a Dell missive have just confirmed the news. The security which Dell is buying back is a so-called tracking stock tied to its 81 percent economic stake in VMware.

DVMT has nearly doubled since the stock was issued, closing at $84.58 on Friday, and they were up 8 percent at 9:38 a.m.in New York Monday.

Once the deal closes, DVMT shareholders (Class V shareholders) will own between 20.8 percent and 31 percent of Dell depending on cash election amounts. DVMT shares rose 5.5 percent to $155.11.

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

The transaction is expected to close in the fourth quarter following approval by a majority of unaffiliated Class V shareholders. "And we're seeing tremendous momentum inside the business", Michael Dell told analysts on a conference call.

The decision keeps VMware as an independent company.

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