Elliott Management Critical Of Dell-VMware Deal: Report


Activist investor Elliott Management is criticizing Dell Technologies' deal to buy the VMware tracking stock for $22 billion, according to a report Monday.

The New York Post, citing three unnamed sources, on Friday reported that Elliott Management has been reaching out to owners of the VMware tracking stock to criticize the proposed deal.

Under the terms of the deal, unveiled in July, Dell Technologies plans to once again go public by swapping shares of Dell Technologies' common stock for shares of the VMware tracking stock, known by the symbol "DVMT."

[Related: Dell's Public Journey From Private Equity Buyout To VMware Share Swap]

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That deal, worth $109 per DVMT share, was at the time a 29-percent premium on the share price.

Those shares, plus a planned large one-time special dividend to be paid to VMware shareholders, currently has a total value of $22 billion, the Post reported.

The Post reported that three unnamed sources have said that New York-based fund manager Elliott Management has reached out to DVMT shareholders to criticize the deal.

However, a source in the investment community confirmed with CRN other reports that Elliott Management has not publicly taken a stance on whether to support the deal or not.

Elliott Management declined to comment on the Post story and on the Dell Technologies and VMware deal. A Dell Technologies spokesperson told CRN via email that the company as a policy does not comment on "rumor or speculation."

Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, a Dell EMC Titanium partner, said the tight integration of Dell and VMware has driven big sales gains for partners.

"The tighter alignment and integration of Dell and VMware has greatly benefited partners," he said."The negative banter comes generally from those folks who are focused on the tactical short term financial component versus the strategic long-term viability of growth for Dell and its partners.”

Since Dell's blockbuster $67 billion acquisition of EMC and VMware, Future Tech's VMware sales are up double digits, said Venero.

"VMware looks at us as a bigger strategic partner now and we have more strategic conversations with them about growing our VMware business," he said. "That is 100 percent tied to the fact that we are a large Dell solution provider."

Venero said he views complaints like those from Elliott Management as nothing more than "rhetoric" that does not coincide with the market reality.

"That rhetoric is constant and always there," he said. "The business innovators and leaders like Michael Dell have proven time and time again the financial people ... wrong. Look at all the people that said the Dell Technologies acquisition of EMC and VMware wouldn't work. Try telling that to partners like us who have had an ability to align and grow our business with Dell, EMC and VMware because of the business acumen of Michael Dell."

Steven Burke contributed to this story.