Dell mulls reverse merger with VMware to go public without IPO

30 Jan 2018

VMware headquarters in Palo Alto. Image: Ken Wolter/Shutterstock

Dell’s destiny is to be a public company again, but will sale to VMware allow it to sidestep IPO razzmatazz?

Dell is considering a sale to VMware in a reverse merger that will allow it to become a publicly traded company again without the need for a formal initial public offer (IPO).

The original merger gave Dell an 80pc stake in VMware. Through corporate sleight of hand, by selling itself to VMware, Dell would return to the public markets without all the shindig that surrounds an IPO.

The move comes more than a year after Dell concluded one of the biggest mergers in tech industry history when it finalised a $67bn merger with EMC.

Dell deliberates on debt

In a single deft move, the tech giant started in Michael Dell’s bedroom in the 1980s would be public again.

Dell delisted from Nasdaq in 2013 after CEO Michael Dell and private equity house Silver Lake completed a controversial $24.9bn buyout of the PC maker.

The reverse merger with $60bn cloud computing giant VMware would see the latter buy Dell, giving investors who backed Dell’s delisting in 2013 considerable payback as well as enabling the PC giant to pay down some of its $50bn in debt.

As reported last week, it is one of several options on the table for Dell, which needs to raise money and boost flagging revenues.

VMware was co-founded in 1998 by Diane Greene, Mendel Rosenblum, Scott Devine, Ellen Wang and Edouard Bugnion, and was the first successful company to virtualise the x86 architecture.

The company was acquired by EMC in 2004 and went public in 2007 when EMC sold 15pc to the public via an IPO.

VMware headquarters in Palo Alto. Image: Ken Wolter/Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years