Dell Technologies to buy out VMWare tracking stock

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A logo of Dell Technologies is seen at the Mobile World Congress in Barcelona, Spain February 28, 2018.

Dell Inc is close to a deal to combine shares that track its VMware Inc virtualization-software unit in an effort that would result in a public listing for the personal computer and data storage company, the Wall Street Journal said on Sunday.

The tracking stock was created to help Dell finance its $67 billion purchase of data storage company EMC 2016, the largest technology takeover ever at the time and one that almost tripled the company's debt load. The holders could exchange their tracking stock for shares in Dell, Class C Common Stock at a 1:1.3665 ratio, or $109/share in cash. VMware shares also rose 10 percent to $161.75. The company also paid off $13 billion in debt stemming from it EMC tie-up. (NYSE: VMW) announced a one-time special dividend valued at $11 billion. Dell founder Michael Dell and investment firm Silver Lake took Dell private in a leveraged buyout in 2013 for about $25 billion.

DVMT has nearly doubled since the stock was issued, closing at $84.58 on Friday, and they were up 8 percent at 9:38 New York Monday.

"Unprecedented data growth is fueling the digital era of IT, and we are uniquely positioned with our portfolio of technologies and services to enable the digital, IT, security and workforce transformations of our customers", Dell said in a prepared statement on Monday.

After the deal, VMware shareholders will own between 20.8 percent and 31 percent of Dell depending on how many investors opt for cash, Dell said.

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Dell in its early years focused on commercial clients, but that changed in the late 1990s when it garnered a huge following among techies who desired more options in customizing PCs.

His strategy is in sharp contrast to that of rival HP Inc, which separated in 2016 from Hewlett Packard Enterprise Co, based on the reasoning that having two technology companies focusing separately on hardware and services would make them more nimble.

Billionaire Carl Icahn is deciding whether to challenge Michael Dell in VMware, sources told The Post.

"Dell is a very different company than it was five years or so years ago".

Should Dell become a public company once again, it's not entirely clear what will happen to VMware - although it should be possible for it to continue to operate as it now does.