Dell to go public after opting against VMware merger

Vendor finally shows hand after months of mulling over 'business opportunities'

Dell is set to go public by the end of the year after deciding not to merge with subsidiary VMware.

The vendor has announced plans to buy out holders of publicly listed DVMT stock - tracking stock that reflects the performance of VMware - using a mix of Dell stocks and cash.

In a statement on Monday, the vendor said the deal will pave the way for Dell to go public on the New York Stock Exchange before the end of 2018.

Negotiations over the stock swap have been in play since 2 February 2018, in an attempt to work out a way to appease DVMT stockholders.

Dell has stressed that VMware itself is expected to be unaffected.

"VMware maintains its independence as a separate publicly traded company while Dell Technologies will continue to own 81 per cent of VMware common stock," said Dell in a statement.

The cash-and-stock deal will involve all shares of DVMT stock being converted into a fixed number of shares of Dell's privately held shares (Dell Class C Common Stock) at a ratio of 1.3665.

Based on an implied value of $109 (€93.62) per DVMT share, that would mean Dell's total market capitalisation value for its privately held shares would be $48.4bn (€41.57bn).

However, stockholders will be restricted to shares amounting to $21.7bn of that amount.

If stockholders choose the cash ejection option, they can expect to receive $109 per share in cash, with their total windfall not able to exceed $9bn.

The deal will enable stockholders to own 20.8 to 31 per cent of Dell Technologies, depending on how much they elect to swap into cash.

Today's news contradicts statements from Dell's CEO and founder, who has often spoken publicly about the benefits the vendor reaped from going private in 2013.

At the time, the deal cost Michael Dell and private equity house Silver Lake Partners $24.9bn.

The company's first IPO was in 1988, just four years after the firm started out in Michael Dell's University of Texas dormitory room.