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Date Set For Critical Dell Shareholder Vote To Decide Public Fate

‘We hope to see you at the special meeting and look forward to the successful completion of the Class V transaction,’ said Dell Technologies CEO Michael Dell in letter to stockholders as part of a filing Friday with the SEC.

After months of debate for and against Dell becoming public through a VMware stock swap, the company has finally set a date for the critical shareholder vote to either approve or reject the $21.7 billion bid to become a public entity.

A special meeting of stockholders of Dell Technologies has been set for 8 a.m. CT on Dec. 11, 2018, at Dell's headquarters in Round Rock, Texas, according to a Dell filing with the Securities and Exchange Commission on Friday.

"We hope to see you at the special meeting and look forward to the successful completion of the Class V transaction," said Dell Technologies CEO Michael Dell in a letter to stockholders that was included in the SEC filing.

[Related: Dell Fires Back At Icahn: VMware Stock Swap 'In The Best Interests' Of Shareholders]

To become a public company again, DVMT shareholders—other than those held by affiliates of Dell Technologies such as Michael Dell and private equity firm Silver Lake—must approve the agreement. Under the terms of the proposed buyout, shareholders of the DVMT tracking stock would exchange each share of DVMT tracking stock for 1.3665 shares of Dell Technologies Class C common stock, or $109 per share with the aggregate, not exceeding $9 billion.

As of Friday afternoon, DVMT tracking stock is at $94.96 per share, while VMware's stock is at $145.56 per share.

If approved, Michael Dell would own between 47 percent and 54 percent of the company while Silver Lake would own between 16 percent and 18 percent. The investors who previously owned DVMT tracking stock would account for between roughly 21 percent and 31 percent of Dell's ownership.

However, if the Dec. 11 shareholder vote fails, Dell has confirmed it has been meeting with investment banks to explore the option of a traditional IPO.

Dan Serpico, CEO of FusionStorm, which was recently acquired by $5 billion European system integrator Computacenter, said he sees the pending shareholder vote on the VMware tracking stock as a chance to get rid of all the unnecessary financial "noise" around Dell’s $67 billion acquisition of EMC and VMware. "This is going to take away all the FUD [fear, uncertainty and doubt] and noise and allow Dell and its partner community to focus on the things that are most important like meeting the customers where the customers are with great solutions, creating a good channel, providing good incentives and investing in future technologies."

The Dell-VMware stock swap debate heated up this week when activist investor Carl Icahn, who owns an 8.3 percent stake in DVMT tracking stock, slammed Dell's proposal in an open letter to stockholders.

"I firmly believe Dell and Silver Lake are trying to capture $11 billion of value that rightly belongs to us, the DVMT stockholders. As such, I intend to do everything in my power to stop this proposed DVMT merger," said Icahn in his letter to shareholders. "It is better to have peace than war, but be assured, I still enjoy a good fight for the right reasons, and in the current situation, I do not see peace arriving quickly!"

Dell responded to CRN about Icahn's scathing letter by saying, "Dell Technologies continues to believe that the proposed offer for DVMT shares, which represents a 29 percent premium to the DVMT share price immediately prior to the announcement of the transaction, is fair and in the best interests of DVMT shareholders. The transaction offers DVMT shareholders an opportunity to hold a direct economic interest in Dell Technologies."

It was also reported that investor Elliott Management criticized the deal, although the investment management firm has yet to take a public stance. Channel partners say Dell going public through a VMware stock swap would benefit them because it would create an even tighter collaboration partnership between the two vendors.

Serpico, who was critical in driving FusionStorm’s ultra-exclusive Titanium Black partnership with Dell EMC, said there simply is no other vendor that has as comprehensive a product portfolio as Dell Technologies. "I don't know of another OEM that has as broad a portfolio as Dell from client to servers to storage to security and the multi-cloud VMware initiatives. Dell has all of the bases covered."

Serpico credited Michael Dell and his team with being great partners for the channel and for delivering value for shareholders, customers and partners.

As for Michael Dell's financial acumen with regard to the EMC acquisition and the structure of the $67 billion deal, Serpico said: "Michael is incredible. I want to know if he can predict the next five Super Bowl winners so I can go to Vegas and bet on them."

STEVEN BURKE contributed to this story.

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