Reports: Dell To Go Public Again In VMware Tracking Stock Share Swap
Dell is set to become a public company once again as a result of a plan to acquire its DVMT VMware software business tracking stock, according to several published reports.
Dell will acquire DVMT at a premium in line with standard transactions, CNBC reported on Sunday, with VMware paying a $9 billion dividend to DVMT holders as part of the deal.
VMware has a market capitalization of $59.7 billion, while DVMT has a market capitalization of about $17 billion.
Although the deal will leave VMware at first unaffected, it could eventually lead to a Dell merger with the highly regarded virtualization/multicloud software maker. In fact, CNBC said the deal could be the "first step in a two step process that gives Dell more control" over VMware.
VMware is 80 percent owned by DVMT tracking stock shareholders and Dell Technologies founder and CEO Michael Dell and private equity giant Silver Lake.
CRN reached out to Dell for comment but had not heard back at press time.
Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, a Dell EMC Titanium partner, said he expects the tracking stock deal to make Dell EMC more competitive in a fast-changing market.
"There is obviously a reason Michael (Dell) has decided to acquire the tracking stock," said Venero. "Things have changed from a tax law and write off perspective. You have to be able to change with the ebbs and flows of the market. Michael has proven himself to be a financial wizard. This is just another example where Michael's financial prowess is going to lead the company in a way that is most advantageous for customers, partners, investors and stockholders."
As for making Dell a publicly held company once again, Venero said it remains to be seen just what kind of impact that will have on the company.
"Nobody has a crystal ball on what the impact positive or negative will be with Dell going public again," he said. "That is yet to be seen based on how the company is going to function and deal with the more regimented reporting and emotional feedback of shareholders."
Venero said Future Tech has grown exponentially as a result of all the moves Michael Dell has made over the years starting with an aggressive move into the channel to taking the company private and then acquiring storage market leader EMC and VMware.
In fact, Venero said both his EMC and VMware business is up significantly since Dell acquired EMC in 2016 for $67 billion in the largest technology acquisition in history.
Future Tech's EMC storage business was one percent of the company's total sales when Dell acquired EMC two years ago and now it is about 20 percent of annual sales, said Venero.
As for VMware, Future Tech struggled with partnering with the software maker before the EMC deal and now Future Tech's VxRail and VxRack sales are growing at a double-digit clip, said Venero "The tighter ties between VMware and Dell have benefitted partners," he said.
Dell Technologies CEO Michael Dell Monday told CRN in an interview last month that customers are demanding ever tighter ties between Dell EMC infrastructure and VMware with "much, much more" integration to come in the future.
"We have a long history here of integrating the technologies closer together," said Dell in an interview with CRN, just one week after Dell Technologies reported triple-digit growth for its VxRail and VxRack hyper-converged systems which leverage VMware software. "This is what customers have been asking us to do. It is what we are doing. It is working extremely well. There is much, much more to come here."
Venero, for his part, says he sees the decision to acquire the DVMT tracking stock and get closer to VMware as one more testatment to the financial and technology acumen of Michael Dell.
"If history has taught us anything it is that Michael Dell is in it to win it," he said. "This is one more move that makes Dell yet again more competitive."