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Dell, VMware Ownership Update Expected

Dell and VMware apparently are nearing a deal that will simplify Dell’s ownership status and take the PC giant public again — without changing VMware’s ownership model in the near term, according to multiple reports about both technology companies.

An official announcement could come July 2, though the proposed moves could also fall through, according to multiple reports. CNBC, Reuters and The Wall Street Journal each have pieces of the overall story.

The pending move, according to CNBC, looks like this:

  • The PC and data center hardware giant will acquire its publicly-traded tracking stock, DVMT.
  • The deal could be the first step in a two-step process that gives Dell more control over VMware.
  • VMware will pay a $9 billion dividend to DVMT holders as part of the deal.

Dell will emerge as a publicly held company, The Journal reports.

Reverse Merger – Yes or No?

Perhaps most importantly to VMware shareholders, partners and customers, the deal will “leave VMware alone for the time being,” CNBC reports.

Still, that’s a bit of a vague statement. VMware shareholders sometimes get touchy about ownership rumors. Michael Dell and his investment advisors earlier this year contemplated a Dell-VMWare reverse merger. At the time, speculation about the potential move pressured VMware’s stock because shareholders didn’t want the fast-growing virtualization company weighed down with a legacy hardware business.

Fast forward to present day, and it sounds like the plan is for Dell to buy VMware over the long haul, rather than VMware buying Dell.  According to Bloomberg’s spin:

“Dell Technologies Inc. will buy out its tracking stock to give it greater control over VMware Inc., a person familiar with the matter said. While VMware will remain independent for now, the move could make it easier for Dell to buy out the rest of the software maker later on.”

The New York Times also points to a potential scenario where Michael Dell and Silver Lake retain close control of the company. According to The Times:

“The deal, which was approved by the boards of Dell and VMware on Sunday evening, would simplify the stock structure of Dell and its publicly traded subsidiary. But it would also mark the return of Dell to the public markets, with a twist: The special shares held by Mr. Dell and Silver Lake would give them more votes than other investors.”

ChannelE2E has not directly confirmed the chatter.

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2 Comments

Comments

    Dan:

    Why would anyone buy Dell stock after what happened when M. Dell took them private? I’m sure I’m not alone in the fact that I lost money on the deal.
    Once bitten, twice shy as in “No way in Dell will I buy Dell Stock.”

    Joe Panettieri:

    The official news from Dell surfaced on July 2.

    What it means for partners, customers and shareholders:
    1. Dell continues to own 81 percent of VMware common stock.
    2. VMware remains a publicly traded company (VMW).
    3. Through a series of financial moves, Dell will emerge as a public company again.
    4. The official announcement from Dell is here.

    -jp

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