Dell said to acquire VMware's US$17 billion tracking stock
Founder Michael Dell has been mulling a variety of options to streamline his multi-company tech empire
Dell Technologies Inc. will buy out its tracking stock to give it greater control over VMware Inc., a person familiar with the matter said. While VMware will remain independent for now, the move could make it easier for Dell to buy out the rest of the software maker later on.
Dell, the world’s largest private technology company, could announce as soon as Monday a proposed share swap to acquire the DVMT tracking stock, currently valued at about US$17 billion, said the person, asking not to be identified discussing a private matter. VMware’s total market value is about $60 billion. Spokesmen for Dell and VMware declined to comment on the news, which was reported by The Wall Street Journal and other media earlier on Sunday.
Founder Michael Dell has considered a variety of options to streamline his multicompany tech empire and help the business manage a massive debt load. Bloomberg first reported earlier this year that Dell was considering subsuming the tracking stock. Other options have included a Dell public offering or combination with VMware, Dell said in a January filing. The company was leaning against a reverse merger with VMware, people familiar with the matter told Bloomberg in April.
The current structure of Dell’s companies is tangled. Dell took the company private for about $25 billion in 2013 with investment firm Silver Lake. The tracking stock was created to help Dell finance its $67 billion purchase of data storage company EMC in 2016, the largest technology takeover ever at the time. The deal was mostly cash, but the rest was paid through the new security linked to part of EMC’s interest in VMware. EMC owned a controlling stake in VMware and the rest of VMware is publicly traded, as is the DVMT tracking stock.
DVMT has almost doubled since the stock was issued, closing at $84.58 on Friday. VMware, based in Palo Alto, California, makes virtualisation software that helps maximise workloads on servers, as well as cloud and device management tools.
