ROUND ROCK, Texas, July 2, 2018 /PRNewswire/ -- The Special
Committee of the Board of Directors of Dell Technologies ("Dell")
representing the holders of Dell's Class V Common Stock (NYSE:
DVMT) today disclosed details of its comprehensive process to
protect and maximize value for the holders of Class V Common Stock
in a negotiated conversion of the Class V Common Stock into shares
of Dell's Class C Common Stock with a cash election option.
![Special Committee Process Special Committee Process](https://mma.prnewswire.com/media/713652/Special_Committe_Process_070218_ID_c38903ef8ae4.jpg)
Under the terms of the transaction, shares of Dell's Class V
Common Stock will be converted into the right to receive a fixed
number of shares of Dell Class C
Common Stock at an exchange ratio of 1.3665 shares of Class C
Common Stock for every share of Class V Common Stock. Based on an
implied value of $109 per share of
Class V, this would represent an equity value for Dell's DHI group
of $48.4 billion and total
consideration to holders of Class V shares of $21.7 billion. Alternatively, holders of Class V
shares can elect to receive $109 per
share in cash in an aggregate amount not to exceed $9 billion.
Based on an implied value of $109
per share of Class V, the transaction represents a premium of 29
percent to the Class V Common Stock price as of June 29, 2018, the last trading day before the
transaction was announced. Following close, Class V stockholders
will own 20.8 percent of Dell if $9
billion in cash consideration is elected or 31 percent of
Dell based on all-stock consideration, reflecting a pro forma
equity value of $61.1-$70.1 billion for Dell Technologies based on an
implied value of $109 per Class V
share.
Following the completion of the transaction, the Class C Common
Stock will be listed on the NYSE, and Dell's governance will
conform to the post-IPO governance structure provided by the Dell
certificate of incorporation and other governance documents. The
transaction remains subject to approval by a majority of the
unaffiliated holders of the Class V Common Stock and is expected to
close in the fourth quarter of calendar year 2018.
The Special Committee said, "Over the last five months, with the
assistance of our independent financial and legal advisors, we have
conducted a thorough evaluation of a number of alternatives to
maximize stockholder value. Throughout the process, we had ongoing
discussions and negotiations with Dell Technologies regarding the
transaction structure and key value parameters. Following this
comprehensive evaluation, we determined that the transaction
announced today is the best way to maximize value for all Class V
stockholders. The implied value of $109 per Class V share provides Class V
stockholders with a significant and immediate premium as well as
the ability to participate in the future upside of Dell
Technologies. Further, the option for stockholders to elect up to
$9 billion in cash (nearly half of
the implied transaction value) provides stockholders the ability
to, in whole or in part, obtain certainty on the value received for
their shares."
On February 2, 2018, the Dell
Board of Directors delegated authority to its independent and
disinterested directors with the mandate to act solely in the
interests of the holders of Class V Common Stock with respect to
Dell's evaluation of potential business opportunities, including
various alternatives Dell considered relating to VMware (NYSE:
VMW). Dell holds an 81 percent economic interest and a 97 percent
voting interest in VMware, and the Class V Common Stock was created
to "track" a portion of this interest. The highly-qualified,
independent and disinterested directors have been acting through a
Special Committee, empowered to act solely in the interests of the
holders of Class V Common Stock with respect to any business
opportunity that would require that the Class V Common Stock be
modified, converted or exchanged other than pursuant to the
existing terms of Dell's certificate of incorporation. Further, any
such change or action was irrevocably conditioned on both the
unanimous approval of the Special Committee and the affirmative
vote of a majority of the outstanding shares of Class V Common
Stock held by unaffiliated stockholders.
The Special Committee is composed of David Dorman, former Chairman and CEO of
AT&T and Founding Partner of Centerview Capital Technology, and
William Green, former Chairman and
CEO of Accenture plc.
In conjunction with its comprehensive evaluation, the Special
Committee:
- Retained independent financial and legal advisors, Evercore and
Latham & Watkins respectively, to assist in the evaluation.
Evercore also rendered a fairness opinion to the Special
Committee;
- Analyzed and gave careful consideration to four distinct
business options to maximize value, including continuing the
"tracker stock" structure under Dell's standalone business plan; a
possible initial public offering of Dell shares and subsequent
conversion by Dell pursuant to the terms of the Class V Common
Stock; a negotiated business combination of Dell and VMware; and
the negotiated conversion into Dell
Class C stock, which was ultimately recommended by the
Special Committee;
- Received feedback from more than 20 stockholders representing
nearly 40 percent of the outstanding stock of Dell's Class V Common
Stock; and
- Sought independent analysis on key aspects of the strategy and
model underlying Dell's financial projections from an independent
industry expert, DISCERN Analytics.
The Special Committee has recommended that the Dell Board of
Directors approve the transaction. After receipt of this
recommendation, the Dell Board of Directors unanimously determined
that the transaction is in the best interest of Dell and its
stockholders and recommends that stockholders approve the
conversion.
Evercore is serving as financial advisor to the Special
Committee representing the Class V common stockholders of Dell, and
Latham & Watkins LLP is serving as legal counsel.
Details of the comprehensive evaluation conducted by the Special
Committee are included in an infographic, which is posted on the
Investor Relations section of Dell's website. The Dell press
release, which was issued separately today, can also be found on
the Investor Relations section of Dell's website.
About Dell Technologies Class V Common Stock
Dell Technologies issued a number of shares of Class V common
stock at the closing of the Dell-EMC merger. Such shares of
Class V common stock currently have an approximately one-to-one
relationship with approximately 61 percent of the shares of VMware
common stock owned by Dell Technologies. There are approximately
199 million publicly traded shares of Class V common stock
outstanding.
Special Note on Forward-Looking Statements:
Statements in this press release that relate to future results
and events are forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 and Section 27A
of the Securities Act of 1933 and are based on Dell Technologies'
current expectations. In some cases, you can identify these
statements by such forward-looking words as "anticipate,"
"believe," "confidence," "could," "estimate," "expect," "guidance,"
"intend," "may," "objective," "outlook," "plan," "project,"
"possible," "potential," "should," "will" and "would," or similar
words or expressions that refer to future events or outcomes.
Dell Technologies' results or events in future periods could
differ materially from those expressed or implied by these
forward-looking statements because of risks, uncertainties, and
other factors that include, but are not limited to, the following:
the failure to consummate or delay in consummating the proposed
transaction, including the failure to obtain the requisite
stockholder approvals or the failure of VMware to pay the special
dividend or any inability of Dell Technologies to pay the cash
consideration to Class V holders, the risk as to the trading price
of Class C common stock to be issued by Dell Technologies in the
proposed transaction relative to the trading price of shares of
Class V common stock and VMware common stock; competitive
pressures; Dell Technologies' reliance on third-party suppliers for
products and components including reliance on single-source or
limited-source suppliers; Dell Technologies' ability to achieve
favorable pricing from its vendors; adverse global economic
conditions and instability in financial markets; Dell Technologies'
execution of its growth, business and acquisition strategies; the
success of Dell Technologies' cost efficiency measures; Dell
Technologies' ability to manage solutions and products and services
transitions in an effective manner; Dell Technologies' ability to
deliver high-quality products and services; Dell Technologies'
foreign operations and ability to generate substantial non-U.S.net
revenue; Dell Technologies' product, customer, and geographic sales
mix, and seasonal sales trends; the performance of Dell
Technologies' sales channel partners; access to the capital markets
by Dell Technologies or its customers; weak economic conditions and
additional regulation; counterparty default risks; the loss by Dell
Technologies of any services contracts with its customers,
including government contracts, and its ability to perform such
contracts at its estimated costs; Dell Technologies' ability to
develop and protect its proprietary intellectual property or obtain
licenses to intellectual property developed by others on
commercially reasonable and competitive terms; infrastructure
disruptions, cyberattacks, or other data security breaches; Dell
Technologies' ability to hedge effectively its exposure to
fluctuations in foreign currency exchange rates and interest rates;
expiration of tax holidays or favorable tax rate structures, or
unfavorable outcomes in tax audits and other tax compliance
matters; impairment of portfolio investments; unfavorable results
of legal proceedings; increased costs and additional regulations
and requirements as a result of Dell Technologies operation as a
public company; Dell Technologies' ability to develop and maintain
effective internal control over financial reporting; compliance
requirements of changing environmental and safety laws; the effect
of armed hostilities, terrorism, natural disasters, and public
health issues; Dell Technologies' substantial level of
indebtedness; the impact of the financial performance of VMware;
and the market volatility of Dell Technologies' pension plan
assets.
This list of risks, uncertainties, and other factors is not
complete. Dell Technologies discusses some of these matters more
fully, as well as certain risk factors that could affect the Dell
Technologies' business, financial condition, results of operations,
and prospects, in its reports filed with the Securities and
Exchange Commission, including Dell Technologies' Annual Report on
Form 10-K for the fiscal year ended February
2, 2018, quarterly reports on Form 10-Q, and current reports
on Form 8-K. These filings are available for review through the
Securities and Exchange Commission's website at www.sec.gov. Any or
all forward-looking statements Dell Technologies makes may turn out
to be wrong and can be affected by inaccurate assumptions Dell
Technologies might make or by known or unknown risks, uncertainties
and other factors, including those identified in this press
release. Accordingly, you should not place undue reliance on the
forward-looking statements made in this press release, which speak
only as of its date. Dell Technologies does not undertake to
update, and expressly disclaims any duty to update, its
forward-looking statements, whether as a result of circumstances or
events that arise after the date.
No Offer or Solicitation
This communication does not constitute an offer to sell or a
solicitation of an offer to sell or a solicitation of an offer to
buy any securities or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended (the "Securities Act"), and
otherwise in accordance with applicable law.
Additional Information and Where to Find It
This communication is being made in respect of the proposed
merger of a wholly-owned subsidiary of Dell Technologies with and
into Dell Technologies, with Dell Technologies as the surviving
entity, pursuant to which each share of Class V common stock of
Dell Technologies will, at the election of the holder, convert into
the right to receive shares of Class C common stock of Dell
Technologies or cash, without interest, and each existing share of
Class A common stock, Class B common stock and Class C common stock
of Dell Technologies will be unaffected by the merger and remain
outstanding. The proposed transaction requires the approval of a
majority of the aggregate voting power of the outstanding shares of
Class A common stock, Class B common stock, Class V common stock
other than those held by affiliates of Dell Technologies, in each
case, voting as a separate class, and all outstanding shares of
common stock of Dell Technologies, voting together as a single
class, and will be submitted to stockholders for their
consideration. Dell Technologies will file a registration statement
containing a preliminary proxy statement/prospectus regarding the
proposed transaction with the Securities and Exchange Commission
("SEC"). After the registration statement has been declared
effective by the SEC, a definitive proxy statement/prospectus will
be mailed to each holder of Class A common stock, Class B common
stock, Class C common stock and Class V common stock entitled to
vote at the special meeting in connection with the proposed
transaction. INVESTORS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS RELATING TO THE
TRANSACTION TO BE FILED WITH THE SEC CAREFULLY AND IN THEIR
ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You
may get these documents, when available, for free by visiting EDGAR
on the SEC Website at www.sec.gov or by visiting Dell Technologies'
website at www.investors.delltechnologies.com.
Participants in the Solicitation
Dell Technologies and its directors, executive officers and
other members of its management and employees may be deemed to be
participants in the solicitation of proxies from its stockholders
in favor of the proposed merger and the other transactions
contemplated by the merger agreement, including the exchange of
shares of Class V common stock of Dell Technologies for shares of
Class C common stock of Dell Technologies or cash. Information
regarding Dell Technologies' directors and executive officers is
contained in Dell Technologies' proxy statement for its 2018 annual
meeting of stockholders, which was filed with the SEC on
May 15, 2018. Additional information
concerning persons who may be considered participants in such
solicitation under the rules of the SEC, including a description of
their direct or indirect interests, by security holdings or
otherwise, will be set forth in the aforementioned proxy
statement/prospectus to be filed with the SEC.
Contact:
Joele Frank, Wilkinson Brimmer
Katcher
Joele Frank / Kelly Sullivan / Andrea Rose
212-355-4449
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SOURCE Special Committee of the Board of Directors of Dell
Technologies