Dell, VMware Public Stock Deal By The Numbers

Dell By The Numbers

Dell Technologies is going public again on the New York Stock Exchange as part of a share swap with its DVMT VMware software business tracking stock.

The $83.5 billion Round Rock, Texas-based infrastructure giant, which owns 82 percent of the publicly held VMware, is bullish that the agreement will boost sales and increase market share in various segments. However, the complex nature of the agreement -- specifically the numbers, figures and percentages involved in the deal -- can be staggering and difficult to comprehend.

CRN combed through recent Dell and VMware filings with the U.S. Securities and Exchange Commission to highlight some of the most important stats and figures that you need to know about Dell's potential blockbuster deal to go public.

47% To 54%

As the agreement currently stands, Michael Dell's stake in the new public company will be between 47 percent to 54 percent fully diluted, likely giving the longtime CEO and founder a large majority of the voting rights. Private equity partner Silver Lake Partners will beneficially own between 16 percent to 18 percent stake fully diluted if the deal is completed as is.

$11 Billion

As part of the deal, VMware's board of directors already approved an $11 billion one-time special dividend to all VMware shareholders. Dell Technologies' share of the dividend will be approximately $9 billion, which the company intends to use to finance the cash payment to shareholders of DVMT, the stock that tracks the performance of VMware, with the remainder, if any, being spent to pay down debt.

$109

Dell plans on exchanging each share of the DVMT tracking stock for 1.3665 shares of Dell Technologies common stock, or $109 per share. This $109 figure was determined through "arms' length negotiation" between Dell Technologies and VMware's Special Committee, according to a SEC filing.

$16 Below

Dell said it would buy the VMware tracking stock for $109 per share. However, although Dell's VMware tracking stock, DVMT, rallied following the public confirmation, it is still only $92.25 per share as of Friday morning – roughly $16 below the offer price. This means investors aren't valuing the stock portion of the transaction at $109.

$53 Billion

Dell currently has a $53 billion stake in its three public subsidiaries, including $49 billion in VMware --which has a market cap of $62 billion -- according to an SEC filing. Dell also has a $3.2 billion stake in Pivotal Software, which Dell says has a market cap of $7.3 billion. The company owns a $900 million stake in SecureWorks, which has a market cap of $1 billion, according to Dell.

29%

Investors can swap the VMware Class V tracking shares for either 1.3665 in Dell common share or $109 in cash each, meaning the offer is a 29 percent premium to the company's closing price of $84.58 on June 29.

180 Days

Michael Dell and private equity firm Silver Lake will be subject to a 180-day lock-up period after the deal is finalized during which they will not be permitted to sell their common stock. Michael Dell will still remain chairman and CEO during this time.

21% To 31%

Following the completion of the transaction, Dell will list its Class C common stock shares on the New York Stock exchange and will eliminate its tracking stock. Investors who owned the tracking stock are expected to collectively own approximately 21 percent to 31 percent of all outstanding shares of Dell Technologies’ common stock.

$86.5 Billion To $88.5 Billion

In a rare move, Dell provided financial guidance of non-GAAP revenue for its current fiscal year 2019. The company expects sales to reach between $86.5 billion to $88.5 billion this fiscal year, which ends Feb. 1, 2019. The company projects long-term overall financial growth of between four to six percent annually over the next several years.

$4.5 Billion

Dell will begin to invest approximately $500 million more in annual research and development as a public entity. Over the past three years, Dell has invested roughly $4 billion in R&D each year. The company now intends to spend approximately $4.5 billion per year moving forward, according to an SEC filing.

No. 1

Dell this week has boasted during conference calls and in SEC filings that it is currently the No. 1 worldwide market share leader in storage, server, converged systems, hyper-converged infrastructure, as well as the US leader in PC shipments in North America. VMware is also the No. 1 ranked global virtualization software leader.

4th Quarter

Dell is targeting becoming a public company sometime during the fourth quarter of calendar year 2018 assuming an affirmative shareholder vote. Upcoming milestones to becoming public include filing of a proxy over the next few weeks and a stockholder vote of tracking minority stockholders in late summer or early fall.