Dell Sweetens Tracking-Stock Deal After Facing Shareholder Pressure
November 15 2018 - 09:25AM
Dow Jones News
By Micah Maidenberg
Dell Technologies Inc. confirmed it is raising its offer to buy
out an affiliate, a move that comes after the company faced
pressure from large investors to sweeten the bid.
The PC maker and data-storage company said Thursday it will
offer owners of DVMT, which tracks the value of Dell's stake in
software maker VMware Inc., $120 a share, up from the original
$109-a-share offer. Dell increased the cash portion of the deal by
$5 billion to $14 billion and modified the ratio of shares in Dell
owners of DVMT would receive.
In 2015, Dell set up the tracking in order to help it finance
its takeover of EMC, the company that owned, at that time, the
majority of VMware. Tracking stocks allow companies to expose
specific business units to public markets, potentially increasing
their visibility and value.
Dell said that sweetened offer increases the value DVMT
shareholders would receive in the deal -- initially valued at about
$22 billion -- by about $2.2 billion. Putting more cash on the
table will increase the "certainty of value" for shareholders in
DVMT, Dell said in a statement.
The Wall Street Journal reported Wednesday that Dell planned to
increase its offer.
The purchase of the tracking stock would help return Dell to
public markets.
Dell said new the proposal has support from key owners of DVMT,
some of whom were considering voting against the company's initial
offer at a special vote scheduled for Dec. 11.
The company said Dodge & Cox, Elliott Management, Canyon
Partners and Mason Capital Management had all signed binding
agreements to support the higher bid. Together, those shareholders
own 17% of DVMT.
Round Rock, Texas-based Dell expects the current owners of DVMT
to own between 17% to 33% of the new publicly traded Dell,
depending on cash and stock elections.
The company also agreed to allow owners of the future publicly
traded Dell shares to elect an independent member to the company's
board.
Activist investor Carl Icahn, who owns a 9.3% stake in DVMT, on
Wednesday said in a statement that future owners of the publicly
traded Dell should have the right to elect at least three
independent directors to the company's board.
It isn't immediately clear whether Mr. Icahn will support the
new proposal but it is expected to have adequate support.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
November 15, 2018 09:10 ET (14:10 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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