Dell to buy out VMware tracking stock in move to go public again

A logo of Dell Technologies is seen at the Mobile World Congress in Barcelona, Spain February 28, 2018. REUTERS/Yves Herman

Dell, which owns 80 percent of VMware, issued the tracking stock in 2016 to fund its purchase of data storage firm EMC Corp.

The elimination of the tracking stock is aimed at simplifying Dell’s complex ownership structure without overburdening its balance sheet, which bears around $50 billion in debt.

Dell, which owns 80 percent of VMware, issued the tracking stock in 2016 to fund its purchase of data storage firm EMC Corp.

The elimination of the tracking stock is aimed at simplifying Dell’s complex ownership structure without overburdening its balance sheet, which bears around $50 billion in debt.

Dell said it will list its Class C shares on the New York Stock Exchange following the completion of the deal.

The transaction represents a premium of 28.9 percent to closing price of Dell’s tracking stock on Friday. The stock was up 13.5 percent at $96 in premarket trading, while VMware shares rose 14.3 percent to $168.

The cash component of the offer will be financed by a one-time $11 billion special dividend that VMware will pay out pro-rata to its shareholders.

After the deal, VMware shareholders will own between 20.8 percent and 31 percent of Dell depending on how many investors opt for cash, Dell said.

Private equity firm Silver Lake helped bankroll Dell CEO Michael Dell in taking the company private in 2013 in a $24.9 billion leveraged buyout.