Investors Drive Dell, VMware Shares Up In Wake Of Deal

Shares of VMware and Dell Technologies' VMware DVMT tracking stock soared Monday after Dell announced that it will once again become a public company.

Shares in VMware closed up 10 percent to $162.02 on July 2 in the wake of the deal.

The Dell Technologies' DVMT tracking stock, meanwhile, rose 9 percent to $92.20.

Dell confirmed Monday that it reached an agreement to take the company public again on the New York Stock Exchange as part of a share swap with its DVMT VMware software business tracking stock. The Round Rock, Texas-based company will exchange each share of the DVMT tracking stock for 1.3665 shares of Dell Technologies common stock, or $109 per share. As part of the deal, VMware's board of directors has approved an $11 billion one-time special dividend to all VMware shareholders.

[Related: Michael Dell: Dell Has No Plans To Combine With VMware ]

Craig Lowery, research director at IT market research firm Gartner, said the stock spike is largely due to both companies delivering solid sales growth and a synergistic technology strategy that has been implemented over the past several quarters.

"The combination of Dell EMC and VMware has been synergistic. It has largely delivered on what was promised," Lowery said in an interview with CRN. "Pulling Dell and EMC together in a single company further reduces places you can go to get those kinds of enterprise products. They have clearly set themselves up to dominate in that market and investors are responding to that."

For the first quarter of 2018, Dell became the worldwide leader in both server and storage market share, according to research firm IDC. Dell captured the lead with 19.1 percent global server share, generating $3.59 billion in revenue, up 50 percent year over year. For storage, Dell EMC took first place with 22 percent share and sales of $2.8 billion, an increase of 43 percent year over year.

Dell and VMware also became the leader in the converged systems and hyper-converged infrastructure markets in the first quarter of 2018, according to IDC, as hyper-converged sales topped $363 million, up a whopping 142 percent year over year.

Solution providers are also bullish on Dell's decision to go public, saying it will create a " more powerful" channel force in the market.