After five years hidden from the scrutiny of Wall Street oversight, Dell is ready to re-emerge from its confines as a privately held company. The $21.7 billion deal, announced Monday, was approved by the boards of Dell and VMware Sunday night. 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.
The world's largest private technology company owns 80 percent of VMware and issued the tracking stock in 2016 to fund its purchase of EMC Corp, then the biggest stakeholder of VMware. After VMware shareholders choose whether they want cash or Dell stock, Dell sharehlders will own between 20.8% and 31% of Dell.
The move marks the end of a strategic review that Dell has been conducting for several months as it has sought to consolidate its complicated ownership structure without overburdening its balance sheet, which bears around $50 billion in debt.
Going public gives Michael Dell and Silver Lake the option to eventually sell down their stakes, even as they affirmed on Monday they had no plans to do so.
The transaction represents a premium of 28.9 percent to the closing price of Dell's tracking stock on Friday.
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.
The transaction "has merit, after notable financial and operational performance gains since Dell went private", said Anand Srinivasan, technology analyst at Bloomberg Intelligence, adding that "Dell's stock issue comes with high expectations, particularly versus Hewlett Packard Enterprise and NetApp".
The tracking stock has almost doubled in value since it was issued, closing Friday at $84.58.
"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", he said.
Dell said early this year that it has about 8,700 employees in MA.
"After the transaction concludes, I am looking forward to VMware's continued independent status, strategy and capital allocation policy for organic investment, M&A and shareholder returns". Its total debt has also gone down by $4.6 billion since the EMC deal.