In a move that could once again make it a publicly traded company, computing and storage giant Dell Inc. plans to announce an acquisition of its publicly traded tracking stock Dell Technologies (DVMT) which it uses to track VMware.
The cash-and-stock deal will eliminate the tracking stock but it will not affect VMware. Dell and its board have been examining a number of options over the past few months including going public and pursuing a reverse merger with VMware.
According to people familiar with the upcoming deal, the company will offer DVMT shareholders significantly more of its privately held shares (DHI common stock) than cash. As a result of the deal, Dell will become a publicly traded stock and DVMT will be acquired at a premium in line with standard transactions.
Dell Technologies will also gain more direct control over VMware. Currently 80 per cent of the company is controlled by the holders of the Dell tracking stock and Dell's DHI shareholders.
Once the deal is complete, Dell technologies will assume direct control over VMware which would give it the option of pursuing a merger with the company at a later time.
Dell was unable to move forward with its original plan to roll up into VMware due to resistance from the company's board and special committee.
As part of the deal announcement, VMware will pay a $9bn dividend to DVMT holders and Dell will use the earnings to pay out its tracker holders.
We will likely learn more regarding the full details of the deal once it is announced.
Image Credit: Flickr / Toshiyuki IMAI