Dell to become a public company again
Michael Dell is taking Dell Technologies public again.
The founder of the Round Rock, Texas-based tech firm, who took the company private five years ago, is overseeing the $21.7 billion purchase of DVMT, a stock that tracks the performance of cloud tech firm VMware.
Dell owns 81 percent of the Palo Alto, California-based software virtualization company, which it got as part of the deal when it and private equity firm Silver Lake bought EMC for $67 billion in 2015. That deal remains the largest technology industry deal ever.
Since taking Dell private, the PC company has evolved into an information technology company, a strategy fueled by the 2015 purchase of EMC, a data storage provider. Within EMC’s portfolio was VMware, which remains a separately traded company.
The revitalization of the company led to the decision by Dell and Silver Lake, which owns 24 percent of Dell common shares, to make the transaction to go public. In its most recent reported financials, Dell said revenue rose 19 percent to $21.4 billion for the three months ending May 4. The company saw double-digit growth in commercial client, servers and storage and at VMware. Also up: PC shipments and workstations.
“A lot has changed since Dell Technologies became a private company ... over the past four and a half years, we’ve transformed to become a leader in our industry, and we are experiencing strong growth as a result,” Michael Dell said during a conference call with investment analysts Monday.
Dell, who owns 72 percent of Dell Technologies, will remain CEO and chairman.
The company now has an
“unmatched portfolio from the edge to the core to the cloud, and we are the trusted technology partner to help customers with their digital transformation,” he said.
Shareholders of the Dell tracking stock DVMT get $109 in cash or 1.3665 shares of the new publicly traded Dell Technologies Class C common stock, which will be traded on the New York Stock Exchange.
VMware will remain a subsidiary of Dell. As part of the deal, VMware will issue an $11 billion dividend, with $9 billion going to Dell.
By taking Dell private, the company was able to weather the downturn in the PC industry and expand into other growing IT sectors including artificial intelligence and Internet of Things devices, Michael Dell said.
A special committee of independent directors began reviewing possible financial strategies in February. The boards of Dell and VMWare approved the transaction Sunday night, as reported by The New York Times. The deal is expected to close during the fourth quarter of 2018.
“I believe we’ve accomplished what we set out to do in evolving the business,” Dell told the Times. “But the work of evolving a company is never done.”