After the expansion of Dell into a huge one-stop technology shop for businesses, Micheal S. Dell and his financial partner, the investment firm Silver Lake, have planned to bring the company back to the public markets in a complicated and regulated fashion that will keep them firmly in control.
When Michael S. Dell took his namesake technology company private in 2013, he said that doing so would give him the freedom to prepare it for a future that stretched well beyond personal computers.
Mr. Dell and Silver Lake are expected to announce as early as Monday that they have struck a $21.7 billion deal to buy out investors in a special class of shares created in 2016 to help Dell buy the networking company EMC. That stock effectively tracks the performance of Dell’s 82 percent stake in VMware, the fast-growing network software company that Dell inherited when it bought EMC.
On Sunday evening, the deal was approved by the boards of Dell and VMware which would simplify the stock structure of Dell and its publicly traded subsidiary. However, it would also mark the return of Dell to the public markets, with a twist: The special shares held by Mr. Dell and Silver Lake would give them more votes than other investors.
The transaction represents in some ways the culmination of a nearly $100 billion bet by Mr. Dell and Silver Lake that, away from the harsh glare of public markets, they could retool a company best-known for making personal computers and traditional servers for an age of smartphones and cloud computing. Dell still supplies the machines that sit on the desks inside many office buildings, and has also found a ready market selling equipment and software to the kinds of networked computing services that were once thought to spell its end.
It was an expensive wager, with Mr. Dell and Silver Lake spending roughly $25 billion to take Dell private, and then $67billion to buy EMC, a transaction that created a kind of one-stop shop for hardware and software needed by companies to run their businesses.
According to the estimates by the research firm, Gartner, Dell has increased its share of both the PC and the server markets. The research firm IDC estimated that Dell’s worldwide server revenue jumped more than 50 percent in the first quarter, taking the top spot from the longtime sector leader Hewlett Packard as it sells more equipment to cloud service providers. Dell also moved into the top spot in United States PC shipments in the first quarter.
With much of the transformation work done, Dell’s owners are ready to make the company public once again.
Under the terms of the deal, Dell will offer either $109 a share in cash or 1.3665 shares of newly issued Class C stock in itself for each share of the tracking stock, known by its ticker, DVMT. The cash portion of the transaction will come from an $11 billion special dividend that VMware will issue to all its Shareholders.
The transaction would help simplify what has been a complicated stock structure. If the deal is approved by shareholders of the DVMT stock.
It is expected that the transaction would not only return Dell to the public markets but the new stock structure would leave Mr. Dell with a free hand to keep making changes in the company to adapt to new trends.
Dell said, “I believe we’ve accomplished what we set out to do in evolving the business. bus the work of evolving a company is never done.”