The world’s largest private tech company is to buy back VMware tracking stock as it prepares to relist in New York
Dell said on Monday it is preparing its return to public markets five years after it contentiously went private.
The company said it has agreed to buy the tracking stock of VMware for $21.7 billion (£16.5bn) in a cash and stock deal following a months-long review of its business.
Dell owns 80 percent of VMware and the deal would give Michael Dell and financial partner Silver Lake greater control of the date centre software company.
Following its $25bn deal to go private and its acquisition of EMC, Dell is the world’s largest privately held tech company.
But it has a large $50bn debt pile, which a return to public markets would give it the opportunity to reduce.
The VMware deal will see Dell exchange each share of its “Class V” tracking stock for 1.3665 shares of Dell Technologies Class C common stock, or at $198 in cash, up to and not exceeding $9bn in cash.
The offer gives Class V shareholders between 20 and 30 percent ownership of Dell, and represents a 29 percent premium on the tracking stock’s closing price before the announcement, valuing VMware equity at $48.4bn.
Dell issued the tracking stock in 2016 to fund its EMC purchase. Eliminating it simplifies Dell’s complex ownership structure without adding large amounts of further debt.
“We are uniquely positioned with our portfolio of technologies and services to enable the digital, IT, security and workforce transformations of our customers,” said Michael Dell, who currently controls 72 percent of the firm. “I remain deeply committed to this company and working with our world-class team to build the long-term value of Dell Technologies and its businesses.”
Dell said it plans to list its Class C shares on the New York Stock Exchange following the completion of the VMware share deal.