Dell Is Going Public Again: 5 Things You Need To Know

Dell Technologies Set To Go Public

After nearly an entire year of debate, negotiation and even a lawsuit, Dell Technologies received shareholder approval on a VMware tracking stock swap deal that paves the way for the company to become publicly held once again.

With the VMware stock swap deal, the Round Rock, Texas-based infrastructure leader was able to streamline the process of become a public entity, bypassing the traditional initial public offering (IPO) route. Dell's year-long journey to become public wasn't necessarily an easy one, but channel partners were confident throughout the process that Chairman and CEO Michael Dell would get the job done.

A new public Dell Technologies lies ahead in 2019. Here are five of the most important aspects of the deal that you need to know.

Dec. 28, 2018

Dell Technologies is set to officially start trading on the New York Stock Exchange on Dec. 28, 2018. Dell's Class C shares will be traded under the tracker DELL. The company previously was listed on the New York Stock Exchange with the stock symbol DELL from 1988 to 2013, at which time Michael Dell and private equity firm Silver Lake Partners bought Dell back from public shareholders for $24 billion.

In 2013, Dell was primarily a PC and server provider with $57 billion in total sales. Dell has since become an $87.5 billion leader in digital transformation and the worldwide leader in storage, servers and hyper-converged infrastructure with plans to drive software innovation in 2019.

Tighter Integration With VMware

VMware was a key reason for Dell's 2016 acquisition of EMC. Dell plans to keep the virtualization leader as a separate company within the new public Dell Technologies. In 2019, the technology collaboration between the two companies is expected to surge.

"You'll continue to see the collaboration advance. VMware has done a great job in enabling and preparing for the multi-cloud world, and obviously it's a very important part of Dell Technologies," said Michael Dell in a recent interview with CRN. "Partners and customers like and appreciate that we're bringing them a complete solution."

Dell was able to streamline its way to the public market through the VMware stock swap deal that partners said shows the companies’ tight ties to one another. Dan McCormick, executive vice president at Davenport Group, a St. Paul, Minn.-based Dell EMC and VMware partner, said Dell becoming a public entity again will accelerate the solution provider's already fast-growing business with Dell EMC and VMware. "We've seen an ongoing commitment to align products, services, solutions and programs, and in the last six months, to align field operations as well," McCormick said. "The investments Dell Technologies has been able to bring together through collaboration with VMware will continue to accelerate."

VMware Tracking Stock Deal Gets 61 Percent Approval

Under Dell's original terms, set earlier this year, shareholders of the DVMT tracking stock would have exchanged each share of DVMT VMware tracking stock for 1.3665 shares of Dell Technologies Class C common stock, or $109 per share, not exceeding $9 billion. After months of complaints on the price of the tracking stock, new terms were created in November where DVMT shareholders would exchange each share for between 1.5043 and 1.8130 of Class C shares, or $120 per share, not exceeding $14 billion—a $5 billion increase to the original deal. The sweetened deal—with a total value estimated of $24 billion—won over the majority of shareholders and caused activist investor Carl Icahn to withdraw a lawsuit he had filed against Dell.

For Dell to become a public company again, DVMT shareholders—other than affiliates of Dell Technologies such as Michael Dell and private equity firm Silver Lake—needed to approve the deal.

During a special shareholder meeting on Dec. 11 at Dell's Round Rock, Texas-based headquarters, holders of more than 61 percent of Dell Technologies' Class V common stock voted in favor of the transaction. Votes in favor of the transaction constituted more than 89 percent of the Class V shares voted by unaffiliated Class V common stockholders who cast a ballot.

As part of the deal, VMware's board of directors approved an $11 billion cash dividend to all VMware shareholders contingent on the completion of the deal. The one-time special dividend will be paid on Dec. 27, 2018, according to a VMware Securities and Exchange Commission filing. The dividend will be payable to all VMware stockholders of record as of the close of business on Dec. 27.

Dell Technologies To Drive Edge-To-Core-To-Cloud

The new publicly traded Dell Technologies will focus on delivering the world's broadest end-to-end IT portfolio with an emphasis on driving digital transformation. Portions of Dell Technologies were publicly traded, such as VMware and the tracker stock, but for the first time in five years investors will now get to invest in the full breadth of the portfolio.

On Tuesday, Michael Dell (pictured) said becoming a public company "strengthens" the company's long-term strategy. "This strengthens our strategic position, as we continue to deliver innovation, long-term vision and integrated solutions from the edge to the core to the cloud," he said in a statement. "We've created Dell Technologies to be our customers' most trusted partner in their digital transformation."

Dell told investors this year that it expects total sales to reach upward of $103 billion by fiscal year 2022. Dell is projecting $87.5 billion in total revenue for its current fiscal year 2019, up 9 percent from $79.9 billion in fiscal year 2018.

Simplified Capital Structure

Becoming a public company will enable Dell Technologies to simplify its capital structure. The move aims to simplify the somewhat tangled corporate structure that holds the technology giant together, which ranges from servers and storage to PCs and security software. The seven brands of Dell Technologies consist of Dell, Dell EMC, Pivotal, RSA, SecureWorks, Virtustream and VMware.

"With this vote, we are simplifying Dell Technologies' capital structure and aligning the interests of our investors," said Michael Dell on Tuesday. For the past year, Dell has been pushing partners to sell solutions across its entire portfolio of seven companies. Leaders across Dell Technologies' seven brands have been working together to create a new rewards program that will give partners more money to sell across its broad portfolio.