Vote Paves Way for Dell to Trade Publicly Again

Dec. 11, 2018

Dell Technologies Inc. is set to return to public markets later this month, after the PC maker and data-storage company recut a deal that garnered sufficient shareholder support.

Shareholders of a stock that tracks Dell’s interest in software maker VMware Inc. voted Tuesday to approve a deal that will simplify Dell’s complex ownership structure and return it to the public markets. The vote followed months of shareholder resistance that prompted Dell to increase its offer and restructure its deal.

Under the terms of the roughly $24 billion deal, Dell will buy out shareholders in the tracking stock, known by its ticker, DVMT. When the deal closes, which is expected Dec. 28, Dell shares will begin trading on the New York Stock Exchange under the ticker DELL.

Dell said Tuesday that more than 61% of all the unaffiliated shareholders in the tracking stock voted in favor of the transaction. Of the unaffiliated shareholders who cast votes, 89% supported the deal.

The shareholder opposition was led by activist investor Carl Icahn, who argued Dell was overvaluing its own shares and, as a result, not paying tracking-stock shareholders enough for theirs. Mr. Icahn, who also lobbied against the deal that took Dell private in 2013, launched a proxy fight against the transaction and sued Dell, accusing it of withholding information.

Other shareholders unhappy with the deal’s original terms included Elliott Management Corp., BlackRock Inc., and Dodge & Cox, among others.

The Wall Street Journal reported that Dell met with several top shareholders last month to negotiate a new offer that would have adequate shareholder support. It came out days later with a sweetened offer publicly endorsed by several top shareholders who owned a combined 17% stake in DVMT.

Dell’s final offer had an implied value of about $24 billion, including $14 billion in cash and the remainder in shares of the future publicly traded Dell. In a unique twist, the exact consideration was tied to how DVMT shares trade. Dell also agreed to allow shareholders of the newly public Dell to elect an independent board member.

Mr. Icahn withdrew his proxy fight and lawsuit after Dell increased the deal terms.

The initial offer had an implied value of about $22 billion. As shareholder dissatisfaction simmered, Dell considered a traditional initial public offering instead and interviewed several banks for underwriting roles, The Wall Street Journal reported.

Dell set up the DVMT tracking stock in 2015 to help it finance its takeover of the data-storage company EMC Corp., then the owner of most of VMware. Tracking stocks let companies expose business to public markets, potentially increasing their value and visibility.

Dell was taken private in a $24.4 billion leveraged buyout. That deal was led by Michael Dell, the company’s founder, and investment firm Silver Lake. Dell’s return to public markets also would allow Silver Lake to cash out of its investment.