Dell has spent the last half-decade as a private business. Michael Dell took his namesake off the public market in 2013 after fending off a takeover attempt from Carl Icahn, who is known for aggressively chasing any company he believes is ready for a quick turnaround. Now, after years of operating without the pressure of public investors, Dell Technologies has announced that it plans to re-debut on the New York Stock Exchange.
Shareholders of the company's Class V tracking stock will be offered the chance to convert their shares to Class C common stock at the rate of 1.3665 shares of Class C stock per share of Class V stock. Alternatively, the shareholders can sell their Class V stock for $109, which Dell said is a 29 percent premium over the stock's closing price before the announcement. (Shareholders can't sell more than $9 billion of the Class V stock.)
The company expects outside shareholders to own between 20.8-31 percent of its stock depending on how many opt for the cash exchange. Michael Dell currently owns 72 percent and will remain the company's chairman and CEO after it goes public again. VMware will remain independent after Dell is back on the NYSE, but its board voted to declare an $11 billion cash dividend pro rata to shareholders, $9 billion of which will go to Dell.
Michael Dell said in a statement:
"I am proud to lead this great company into its next chapter as we continue to evolve and grow to the benefit of our customers, partners, investors and team members. 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. Most importantly, I remain deeply committed to this company and working with our world-class team to build the long-term value of Dell Technologies and its businesses."
The decision to go public again comes after a special committee spent five months exploring Dell's options. The committee said in the press release that going public--and offering up to $109 per share via the cash exchange option--is the best way for the company to maximize its value to shareholders. VMware's board appeared to agree, since it's effectively footing the up-to-$9-billion bill with the $11 billion cash dividend.
Dell said of its financials: "In the most recent quarter, the company generated revenue of $21.4 billion, a 19 percent increase year-over-year, net loss decreased 55 percent to $0.5 billion and the company generated $2.4 billion of adjusted EBITDA, a 33 percent increase year-over-year." It also said that it "generated $82.4 billion of revenue with a net loss of $2.3 billion and cash flow from operations of $7.7 billion" over the last 12 months.
The deal is expected to close in Q4 2018 if it's approved by a majority of Class V shareholders and makes its way through regulators.