VMWare Plans to Buy Back $1.2 Billion in Shares After Dell Takeover Vote -- Update
April 19 2016 - 8:43PM
Dow Jones News
By Robert McMillan
VMware Inc. is giving shareholders of its parent company EMC
Corp. a little more incentive to approve a planned takeover by Dell
Inc.
VMware's stock surged over 9% in after-hours trading Tuesday
after the company reported solid quarterly results and said it
would begin a $1.2 billion stock buyback. The repurchase is set to
begin after EMC shareholders vote on the Dell acquisition, an event
expected six weeks after Dell files its final SEC paperwork on the
transaction.
The buyback is good news to EMC shareholders because Dell's
parent company, Denali Holding Inc., is offering them $24.05 in
cash, plus a tracking stock valued at 0.111 the value of VMware's
shares. By reacquiring its stock, VMware will reduce the number of
shares outstanding for sale, likely increasing their market
value.
VMware shares have fallen since the Dell-EMC merger was
announced late last year, dropping 35% on worries that the tie-up
will harm VMware's data center software business.
The discounted price helped make the buyback attractive, said
Abhey Lamba, managing director with Mizuho Securities USA Inc.
"We think that the whole decision to do buybacks is a function
of, number one, cheap valuation on VMware stock and, number two,
management's desire to support the stock ahead of the Dell/EMC
combination," Mr. Lamba said.
VMware on Tuesday also provided reassurance for investors
concerned that the merger might be distracting management from
attending to the company's performance. For its most-recent
quarter, VMware announced adjusted earnings of 86 cents per share,
2 cents ahead of analyst expectations.
The company reaffirmed its financial guidance for the year,
saying that revenues will come in between $6.785 billion and $6.935
billion.
Write to Robert McMillan at Robert.Mcmillan@wsj.com
(END) Dow Jones Newswires
April 19, 2016 20:28 ET (00:28 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Global X Funds (NYSE:EMC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Global X Funds (NYSE:EMC)
Historical Stock Chart
From Sep 2023 to Sep 2024
