Dell is going public again with tracking stock buyout

Bazuki Muhammad  REUTERS

Billionaire Carl Icahn is deciding whether to challenge Michael Dell in VMware, sources told The Post.

The shares that track its interest in VMware Inc. jumped 8 per cent in early trading.

"We are excited that public investors will share in Dell Technologies' dynamic value creation with Silver Lake, which has no plans to seek liquidity and remains an enthusiastic long-term shareholder". Those shares will end up traded on the NYSE, around five years later after its founder took the company private with Silver Lake Partners in a deal worth roughly $25 billion.

At the weekend, the WSJ reported the possibility that Dell would attempt to swap privately held shares in itself with the "tracking stock" it created when buying EMC - and the * a target="_blank" href="https://searchwww.sec.gov/EDGARFSClient/jsp/EDGAR_MainAccess.jsp?search_text=*&sort=Date&formType=1&isAdv=true&stemming=true&numResults=10&queryCo=Dell%20Technologies&numResults=10" *SEC filing and a Dell missive have just confirmed the news. The security which Dell is buying back is a so-called tracking stock tied to its 81 percent economic stake in VMware.

Michael Dell now owns 72 percent of common shares in Dell, while Silver Lake owns 24 percent. VMware specializes in virtualization, a technology which allows multiple systems and applications to run at the same time on the same server, which can cut companies' IT costs. The agreement also included EMC's majority stake in VMWare, which now has a market cap of around $50 billion, as well as ownership of Pivotal, SecureWorks, RSA and VirtuStream.

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The transaction represents a premium of 28.9 percent to the closing price of Dell's tracking stock on Friday.

Should Dell become a public company once again, it's not entirely clear what will happen to VMware - although it should be possible for it to continue to operate as it now does. Alternatively, VMware shareholders could opt for $109 in cash.

"After the transaction concludes, I am looking forward to VMware's continued independent status, strategy and capital allocation policy for organic investment, M&A and shareholder returns".

Dell in its early years focused on commercial clients, but that changed in the late 1990s when it garnered a huge following among techies who desired more options in customizing PCs.

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