Dell Returns To The Public Markets With Stock Conversion Funded By VMware Dividend

Monday’s a good day for just about any investor with a Dell connection.

What Happened

Dell Technologies Inc DVMT announced Monday that a committee representing Class V common stockholders approved the conversion of their tracking shares into Class C common stock or cash.

The new Class C stock will be publicly listed at an implied value of $109 per share, which represents a 29-percent premium to the stock’s Friday price, and will give the firm a $21.7-billion market cap.

In connection with the transaction, VMware, Inc. VMW announced a one-time special dividend valued at $11 billion.

Why It’s Important

The deal will bring Dell back to the public markets after five years as a private entity. Until now, investors have gained exposure to Dell by purchasing shadows of shadows of the company.

VMware is a subsidiary of a subsidiary, and DVMT represented a mere 65-percent stake of a subsidiary’s (EMC’s) 81-percent stake in a subsidiary (VMware).

The decision keeps VMware as an independent company. Dell had been exploring a reverse merger earlier this year.

VMware traded up as much as 8.2 percent and Dell Technologies 12 percent on the news.

What’s Next

The transaction is expected to close in the fourth quarter following approval by a majority of unaffiliated Class V shareholders. Dell will use the dividend proceeds from VMware to facilitate the proposed transaction.

At time of publication, Dell was trading up 7.7 percent at $91.10, and VMware was up 5.4 percent at $155.

Related Links:

This Day In Market History: The Dell IPO

The Dell, Dell Technologies And VMWare Family Tree

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