ROUND ROCK, Texas, Nov. 15, 2018 /PRNewswire/ --
- Final per share offer of $120
cash, subject to an increased aggregate cash cap of $14 billion, or 1.5043-1.8130 Class C shares;
increases aggregate implied value to Class V stockholders by
approximately $2.2 billion
- Binding agreements to vote in favor of the enhanced transaction
executed with Dodge & Cox, Elliott Management, Canyon Partners
and Mason Capital Management, collectively holding approximately
17% of the Class V common stock
- Up to 59% of the total consideration will be payable in cash,
increasing certainty of value; variable exchange ratio protects
Class V stockholders who receive stock
- More robust corporate governance structure and enhanced Class C
stockholder rights, including the ability for Class C stockholders,
as a class, to elect an independent director
Dell Technologies today announced that it has agreed with the
Dell Technologies Special Committee to amend the proposed Class V
common stock transaction to increase the consideration payable to
Class V stockholders, following extensive investor outreach and
engagement. Under the final proposal, Class V stockholders can
elect to receive for each share of Class V common stock either (1)
$120, in cash, subject to an
aggregate $14 billion cap, or (2)
between 1.5043 and 1.8130 shares of Class C common stock,
determined as described below.
Given there will be no public market for Dell Technologies Class
C shares prior to closing, the variable exchange ratio is
specifically designed to provide protection to Class V stockholders
on the value of the Class C stock consideration. The exchange ratio
will be determined based on (1) the volume weighted average trading
price of the Class V shares during the 17-day trading period ending
on the election deadline, which is the eighth trading day after
announcement that stockholders have approved the transaction, and
(2) the total amount of cash consideration that is elected.
Appendix A to this release provides further information on the
calculation of the exchange ratio.
The revised Class V transaction is a result of significant,
detailed input from Class V stockholders and the Dell Technologies
Special Committee regarding value, consideration mix and corporate
governance. An overwhelming number of shareholders contacted by
Dell Technologies supported the revised transaction. Funds
affiliated with Dodge & Cox, Elliott Management, Canyon
Partners and Mason Capital Management, who collectively owned
approximately 17% of the total outstanding Class V common stock on
the record date for the December 11,
2018 stockholders meeting, have entered into binding
agreements to vote in favor of the revised Class V transaction.
The $120 implied value per share
implies a total market capitalization of $23.9 billion for the Class V common stock. The
increase in consideration provides Class V stockholders with an
additional $2.2 billion in aggregate
implied value. Immediately following completion of the proposed
transaction, the Class V stockholders will own approximately
17%-33% of Dell Technologies, depending on the amount of cash and
stock elections and the final exchange ratio.
The $5 billion increase in the
maximum aggregate cash consideration provides those Class V
stockholders who would prefer to receive cash with greater value
certainty and increases the ability for stockholders to receive
their preferred mix of cash and Class C common stock. Approximately
59% of the consideration, equivalent to approximately $70 per Class V share, will be payable in cash if
all Class V stockholders make cash elections. Dell Technologies
expects to fund the increase in the maximum aggregate cash
consideration with up to $5 billion
of debt financing. The Company does not expect a ratings
downgrade following the incurrence of such financing.
Class V stockholders will continue to have the option to elect
Class C common stock, representing a direct economic interest in
Dell Technologies, an unmatched technology platform with the most
complete portfolio of technology solutions across software,
hardware and services. Furthermore, the interests of Class C common
stockholders will be aligned with those of Michael Dell and Silver Lake, the two largest
holders of Dell Technologies stock who are long-term investors and
are focused on driving stockholder value.
Dell Technologies has also enhanced the governance rights
associated with the Class C common stock by agreeing that Class C
stockholders will have the right, as a class, to elect one director
starting at the 2020 annual meeting. Dell Technologies will also
establish a Nominating and Corporate Governance Committee, which
will select or recommend the Company's nominee for such Class C
director. The Board of Directors of Dell Technologies will also
select a fourth independent director to be appointed to the Board
by June 30, 2019.
Charles Pohl, Chairman of Dodge
and Cox, said: "We believe the revised terms announced today align
with the best interests of all Class V shareholders. They offer a
significantly increased cash consideration and the opportunity to
realize long-term potential upside through ongoing ownership of
Dell Technologies."
Jesse Cohn, Partner at Elliott
Management, said: "We believe this transaction represents a
favorable outcome for all Class V stockholders, who will receive
greater value certainty through the increased cash component and
downside protection on the value of the Class C common stock.
Additionally, by simplifying Dell's capital structure, this
transaction provides a clear path for Class V stockholders to
participate alongside Michael Dell
and Silver Lake in what we believe will be substantial stockholder
value creation at Dell Technologies over the long term."
Jonathan Heller, a Partner at
Canyon, said: "The new terms offer a constructive compromise that
we believe benefits all stockholders. The revised deal and the
increase in cash consideration for Class V stockholders demonstrate
Dell and Silver Lake's positive outlook on the prospects for Dell
Technologies' future."
Dell Technologies' Special Committee and Board of Directors have
unanimously approved the amended proposal. Dell Technologies'
Special Committee, which represents the interests of the Class V
stockholders, unanimously recommends that the Class V stockholders
vote "FOR" the proposed transaction as it believes the proposed
transaction is fair to and in the best interests of the Class V
stockholders. The Dell Technologies' Board of Directors unanimously
recommends that all stockholders vote "FOR" the proposed
transaction as it believes the proposed transaction is fair to and
in the best interests of all stockholders.
"We're excited about the opportunity ahead for Dell Technologies
and we're excited to share that opportunity with our public
investors," said Michael Dell,
Chairman and CEO of Dell Technologies. "Dell Technologies has an
unmatched portfolio of leading solutions to support customers'
digital transformation. We are driving integrated innovation from
the edge to the core to the cloud, and we are delivering
outstanding financial performance. We put forward a very attractive
offer and look forward to the stockholder vote."
Egon Durban, Managing Partner and Managing Director of Silver
Lake, commented: "As we have previously stated, Silver Lake remains
an enthusiastic long-term stockholder of Dell Technologies. We
recently reaffirmed our commitment with the announcement that we
have received approval from our investors to complete a
fund-to-fund transaction that will allow us to extend our
investment horizon in Dell Technologies. We believe Dell
Technologies remains an attractive long-term investment opportunity
as a result of the dramatic transformation the Company has
completed since we initially partnered with Michael more than five
years ago."
David Dorman and William Green of the Special Committee
commented: "With the significant increase in value and enhanced
deal terms announced today, including at least an additional
$2.2 billion of overall value, an
additional $5 billion in cash
consideration, enhanced downside protection through the collared
floating exchange ratio and the right to elect a Class C member of
the Board of Directors, our conviction in this transaction has
grown. Notably, the increased cash consideration to up to
$14 billion represents 59% of the
total consideration, substantially increasing certainty of value
for DVMT stockholders. The Special Committee, with the support of
stockholders representing approximately 17% of shares outstanding,
continues to believe that the proposed transaction represents the
best option for all Class V stockholders and recommends they
approve the transaction."
Dell Technologies has received commitments from Barclays, BofA
Merrill Lynch, Citi, Credit Suisse, Deutsche Bank Securities Inc.,
affiliates of Goldman, Sachs & Co., J.P. Morgan, Morgan Stanley
& Co. LLC, RBC Capital Markets and UBS Investment Bank (in
alphabetical order) to provide up to $5
billion of debt financing. With its robust cash generation,
Dell Technologies will continue to benefit from a strong balance
sheet and ample financial flexibility following the proposed
transaction with $6.7 billion of cash
and investments on its balance sheet (excluding publicly traded
subsidiaries and after adjusting for the $600 million September debt paydown) and
approximately $4 billion in undrawn
revolver capacity as of the second quarter of fiscal year 2019. The
Company will continue to focus on debt repayment and achieving an
investment grade corporate credit rating while making the right
investments in the business.
The proposed transaction remains subject to approval by the
Class V stockholders representing a majority of the voting power of
the outstanding Class V common stock other than those held by
affiliates of Dell Technologies. The proposed transaction is also
subject to other customary closing conditions. The stockholder vote
for this transaction remains scheduled for December 11, 2018 and it is expected to close by
the end of 2018.
About Dell Technologies
Dell Technologies is a unique family of businesses that provides
the essential infrastructure for organizations to build their
digital future, transform IT and protect their most important
asset, information. The Company services customers of all sizes
across 180 countries – ranging from 99 percent of the Fortune 500
to individual consumers – with the industry's most comprehensive
and innovative portfolio from the edge to the core to the
cloud.
Appendix A: Calculation of the Exchange Ratio
The exchange ratio will be at least 1.5043 and may be increased
under certain circumstances (such increase, the "exchange ratio
adjustment"). The exchange ratio adjustment will be a number of
shares equal to (a) 0.01998 multiplied by (b) the lesser of (x)
$15.45 and (y) the amount (which may
be zero but, for the avoidance of doubt, not less than zero) by
which the volume weighted average trading price of the Class V
shares in the 17-day trading period ending on the election deadline
is less than $120.00 multiplied by
(c) the lesser of (x) one (1) and (y) a fraction (i) the numerator
of which is equal to the aggregate amount of cash consideration
elected by Class V holders as of the election deadline and (ii) the
denominator of which is equal to $14,000,000,000. In no event will
the exchange ratio be less than 1.5043 nor more than 1.8130.
The exchange ratio adjustment increases as the amount of cash
elected to be received by holders of Class V common stock as of the
election deadline increases, and will also increase as the volume
weighted average trading price of the Class V shares in the 17-day
trading period ending on the election deadline decreases. The
tables below illustrate the range of possible exchange ratios and
corresponding ownership in Dell Technologies of the Class V holders
immediately after closing, assuming certain Class V trading prices
and cash election amounts as of the election deadline:
Exchange Ratio:
Aggregate
|
Illustrative Class
V Trading Price ($)
|
Cash
Election
|
$120.00
|
$118.00
|
$116.00
|
$114.00
|
$112.00
|
$110.00
|
$108.00
|
$106.00
|
$104.55
|
Amount
($B)
|
(or
more)
|
|
|
|
|
|
|
|
(or
less)
|
$0.0
|
1.5043
|
1.5043
|
1.5043
|
1.5043
|
1.5043
|
1.5043
|
1.5043
|
1.5043
|
1.5043
|
$2.0
|
1.5043
|
1.5100
|
1.5157
|
1.5214
|
1.5271
|
1.5328
|
1.5386
|
1.5443
|
1.5484
|
$4.0
|
1.5043
|
1.5157
|
1.5271
|
1.5386
|
1.5500
|
1.5614
|
1.5728
|
1.5842
|
1.5925
|
$6.0
|
1.5043
|
1.5214
|
1.5386
|
1.5557
|
1.5728
|
1.5899
|
1.6071
|
1.6242
|
1.6366
|
$8.0
|
1.5043
|
1.5271
|
1.5500
|
1.5728
|
1.5956
|
1.6185
|
1.6413
|
1.6641
|
1.6807
|
$10.0
|
1.5043
|
1.5328
|
1.5614
|
1.5899
|
1.6185
|
1.6470
|
1.6756
|
1.7041
|
1.7248
|
$12.0
|
1.5043
|
1.5386
|
1.5728
|
1.6071
|
1.6413
|
1.6756
|
1.7098
|
1.7441
|
1.7689
|
$14.0
|
1.5043
|
1.5443
|
1.5842
|
1.6242
|
1.6641
|
1.7041
|
1.7441
|
1.7840
|
1.8130
|
Corresponding ownership in Dell Technologies of the Class V
holders immediately after closing:
Aggregate
|
Illustrative Class
V Trading Price ($)
|
Cash
Election
|
$120.00
|
$118.00
|
$116.00
|
$114.00
|
$112.00
|
$110.00
|
$108.00
|
$106.00
|
$104.55
|
Amount
($B)
|
(or
more)
|
|
|
|
|
|
|
|
(or
less)
|
$0.0
|
33.1%
|
33.1%
|
33.1%
|
33.1%
|
33.1%
|
33.1%
|
33.1%
|
33.1%
|
33.1%
|
$2.0
|
31.2%
|
31.3%
|
31.4%
|
31.5%
|
31.5%
|
31.6%
|
31.7%
|
31.8%
|
31.8%
|
$4.0
|
29.2%
|
29.4%
|
29.5%
|
29.7%
|
29.8%
|
30.0%
|
30.1%
|
30.3%
|
30.4%
|
$6.0
|
27.1%
|
27.3%
|
27.5%
|
27.7%
|
28.0%
|
28.2%
|
28.4%
|
28.6%
|
28.8%
|
$8.0
|
24.8%
|
25.1%
|
25.4%
|
25.6%
|
25.9%
|
26.2%
|
26.5%
|
26.7%
|
26.9%
|
$10.0
|
22.4%
|
22.7%
|
23.0%
|
23.4%
|
23.7%
|
24.0%
|
24.3%
|
24.6%
|
24.8%
|
$12.0
|
19.8%
|
20.2%
|
20.5%
|
20.9%
|
21.2%
|
21.6%
|
21.9%
|
22.3%
|
22.5%
|
$14.0
|
17.0%
|
17.4%
|
17.8%
|
18.2%
|
18.5%
|
18.9%
|
19.2%
|
19.6%
|
19.8%
|
The table below illustrates the number of shares of Class C
common stock to be issued, the total number of shares of common
stock of Dell Technologies that will be outstanding and the
ownership percentage in Dell Technologies that will be held by
current Class V stockholders, in each case, assuming that holders
elect to receive $14 billion or more
of cash:
|
Illustrative Class
V Trading Price ($)
|
|
$120.00
|
$118.00
|
$116.00
|
$114.00
|
$112.00
|
$110.00
|
$108.00
|
$106.00
|
$104.55
|
Class C Shares
Issued (millions)
|
124.4
|
127.7
|
131.0
|
134.3
|
137.6
|
140.9
|
144.2
|
147.5
|
149.9
|
Total Common Stock
(millions)
|
729.9
|
733.2
|
736.5
|
739.8
|
743.1
|
746.4
|
749.7
|
753.0
|
755.4
|
Ownership
%
|
17.0%
|
17.4%
|
17.8%
|
18.2%
|
18.5%
|
18.9%
|
19.2%
|
19.6%
|
19.8%
|
Further details on the exchange ratio adjustment are contained
in the amendment to the merger agreement which will be filed with
the SEC today.
Stockholders electing to receive stock will receive, for each
share of Class V common stock, a number of shares of Class C common
stock that is equal to the exchange ratio. Stockholders electing to
receive cash consideration will receive $120 per share, unless the aggregate cash
elections exceed $14 billion, in
which case the amount of cash to be received per share will be
pro-rated and the remainder of the consideration will be paid in
stock, based on the exchange ratio. If all stockholders elect to
receive cash, then all stockholders will receive $70.23 per share in cash and a number of shares
equal to 41% multiplied by the exchange ratio.
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 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 and 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 has filed a registration statement
on Form S-4 (File No. 333-226618). The registration statement was
declared effective by the Securities and Exchange Commission
("SEC") on October 19, 2018, and a
definitive proxy statement/prospectus was 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 on or about October 23, 2018. INVESTORS ARE URGED TO READ THE
PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS RELATING TO THE
TRANSACTION 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
http://investors.delltechnologies.com.
Participants in the Solicitation:
Dell Technologies and its consolidated subsidiaries and their
directors, executive officers and other members of their management
and employees, and Silver Lake Technology Management, L.L.C. and
its managing partners and employees, may be deemed to be
participants in the solicitation of proxies from the stockholders
of Dell Technologies 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 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, is set forth in the aforementioned proxy
statement/prospectus that has been filed with the SEC.
Dell Technologies Inc. Disclosure Regarding Forward-Looking
Statements:
This communication contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. The words
"may," "will," "anticipate," "estimate," "expect," "intend,"
"plan," "aim," "seek," and similar expressions as they relate to
Dell Technologies or its management are intended to identify these
forward-looking statements. All statements by Dell Technologies
regarding its expected financial position, revenues, cash flows and
other operating results, business strategy, legal proceedings, and
similar matters are forward-looking statements. The expectations
expressed or implied in these forward-looking statements may not
turn out to be correct. Dell Technologies' results could be
materially different from its expectations because of various
risks, including but not limited to: (i) 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;
(ii) 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,
Inc. common stock; and (iii) the risks discussed in the "Risk
Factors" section of the registration statement on Form S-4 (File
No. 333-226618) that has been filed with the SEC and declared
effective as well as its periodic and current reports filed with
the SEC. Any forward-looking statement speaks only as of the date
as of which such statement is made, and, except as required by law,
Dell Technologies undertakes no obligation to update any
forward-looking statement after the date as of which such statement
was made, whether to reflect changes in circumstances or
expectations, the occurrence of unanticipated events, or
otherwise.
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SOURCE Dell Technologies