VMware Loses Nearly $10 Billion In Market Value Following Reverse Merger Report
It was a tough week for VMware and its shareholders. VMware stock plunged more than $25 per share or nearly 17 percent in trading Monday after reports of a possible "reverse merger" that would see VMware acquire the larger Dell to pave the way for Dell to go public without filing for an IPO.
On Friday the company confirmed that the Dell Technologies board is considering such a plan.
The report shook investors and the drop in its share price resulted in VMware's market capitalization falling to $50.90 billion on Monday from $60.47 billion at the close of trading Jan. 26. (By Friday of this week VMware's stock had rebounded slightly, trading in the range of $126-$127 per share with a market capitalization of just over $51 billion.)
Dell owns 80 percent of VMware, meaning that it too was a loser in VMware's falling stock price.
Dell is wrestling with new interest tax deduction limitations that were part of the Tax Cuts and Jobs Act passed by Congress in December. Dell has $50 billion in debt on its balance sheet after it acquired EMC for $67 billion in 2016.