Dell Moves Closer to Trading Publicly -- WSJ
December 12 2018 - 3:02AM
Dow Jones News
Vote approves deal in which company buys out DVMT tracking stock
shareholders
By Cara Lombardo and Micah Maidenberg
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 12, 2018).
Dell Technologies Inc. is set to return to public markets later
this month, after the PC maker and data-storage company recut a
deal that garnered sufficient shareholder support.
Shareholders of a stock that tracks Dell's interest in software
maker VMware Inc. voted Tuesday to approve a deal that will
simplify Dell's complex ownership structure and return it to the
public markets. The vote followed months of shareholder resistance
that prompted Dell to increase its offer and restructure its
deal.
Under the terms of the roughly $24 billion deal, Dell will buy
out shareholders in the tracking stock, known by its ticker, DVMT.
When the deal closes, which is expected Dec. 28, Dell shares will
begin trading on the New York Stock Exchange under the ticker
DELL.
Dell said Tuesday that more than 61% of all the unaffiliated
shareholders in the tracking stock voted in favor of the
transaction. Of the unaffiliated shareholders who cast votes, 89%
supported the deal.
The shareholder opposition was led by activist investor Carl
Icahn, who argued Dell was overvaluing its own shares and, as a
result, not paying tracking-stock shareholders enough for theirs.
Mr. Icahn, who also lobbied against the deal that took Dell private
in 2013, launched a proxy fight against the transaction and sued
Dell, accusing it of withholding information.
Other shareholders unhappy with the deal's original terms
included Elliott Management Corp., BlackRock Inc., and Dodge &
Cox, among others.
The Wall Street Journal reported that Dell met with several top
shareholders last month to negotiate a new offer that would have
adequate shareholder support. It came out days later with a
sweetened offer publicly endorsed by several top shareholders who
owned a combined 17% stake in DVMT.
Dell's final offer had an implied value of about $24 billion,
including $14 billion in cash and the remainder in shares of the
future publicly traded Dell. In a unique twist, the exact
consideration was tied to how DVMT shares trade. Dell also agreed
to allow shareholders of the newly public Dell to elect an
independent board member.
Mr. Icahn withdrew his proxy fight and lawsuit after Dell
increased the deal terms.
The initial offer had an implied value of about $22 billion. As
shareholder dissatisfaction simmered, Dell considered a traditional
initial public offering instead and interviewed several banks for
underwriting roles, The Wall Street Journal reported.
Dell set up the DVMT tracking stock in 2015 to help it finance
its takeover of the data-storage company EMC Corp., then the owner
of most of VMware. Tracking stocks let companies expose business to
public markets, potentially increasing their value and
visibility.
Dell was taken private in a $24.4 billion leveraged buyout. That
deal was led by Michael Dell, the company's founder, and investment
firm Silver Lake. Dell's return to public markets also would allow
Silver Lake to cash out of its investment.
Write to Cara Lombardo at cara.lombardo@wsj.com and Micah
Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
December 12, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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