VMware share-swap with Dell is virtually a done deal, according to reports.
Computing and storage giant Dell Inc is to acquire a tracking stock called Dell Technologies (DVMT), which it uses to track VMware, in a slick move that will effectively return the former to the public markets.
According to The Wall Street Journal, an agreement could be reached tonight (2 July).
Dell is understood to be planning to acquire the DVMT shares at a premium in a deal in which shareholders in VMware will receive a windfall of close to $9bn in cash.
Confused? Well, private company Dell is basically buying shares in itself in order to return to the public stock market without having to go through all the initial public offering (IPO) fuss.
It is understood that the transaction will also give Dell more control over VMWare and opens the door to a potential merger down the road.
Biggest merger in tech industry history
DVMT has a market cap of $17bn while VMware’s market cap is at almost $60bn.
The stock was created when Dell merged with EMC in 2016 in a $67bn deal, the biggest merger in tech industry history.
The merger was financed mostly through cash but also in part through stock. That little bit of stock was the DVTM tracking stock, which was linked to a portion of EMC’s share in VMware.
Since the merger with EMC, the tracking stock has doubled in value.
Dell went private in 2013 as part of a buyout agreed between founder Michael Dell and investment firm Silver Lake.