Since January, rumours have been flying that Dell is planning a reverse merger with its VMware subsidiary, which would allow privately held Dell Technologies to become a publicly traded stock again without going for IPO.
CNBC quotes sources close to the matter who say that founder and CEO Michael Dell is now discussing details of a deal to take the company back into the public market, perhaps as early as April.
Dell and VMware are reportedly considering an equity exchange to give Dell access to VMware’s cashflow by merging the companies into a new publicly traded entity.
In February, Dell disclosed in an SEC filing that a reverse merger was one of the “potential business opportunities” being discussed. Analysts have suggested VMware’s board could hold a “majority of the minority” vote on the deal.
Dell’s $67 billion acquisition of EMC – announced in 2015, completed in 2016 – was the biggest in tech industry history. As part of the deal, it acquired a majority stake in VMware, which continued trading as a public company, while EMC was taken private.
However, that deal will be dwarfed by any deal between Qualcomm and Broadcom, as reported by Internet of Business earlier this week.
Internet of Business says
The acquisition of EMC freighted Dell with an estimated $50 billion of debt. A reverse merger – selling itself to a company in which it owns a majority stake – would allow investors to monetise their support of Dell taking itself private, while also tackling its debt problem.
Alternative strategies would include Dell selling its 80 per cent stake in VMware, buying the remaining 20 per cent, or going for IPO five years after taking itself private. The reverse merger is thought to be a simpler option than relisting, unlikely thought that may seem.
• Dell recently announced that it was investing $1 billion over the next three years in a new central IoT division. This will focus on developing next-gen products, research, and partnerships, across everything from driverless cars to smart light bulbs, with a focus on edge computing and the distributed core. Dell has also invested in a number of IoT startups, including security specialist Zingbox.
Last month, Internet of Business reported that revenues from Dell EMC’s Internet of Things and OEM business in Asia Pacific and Japan (APJ) passed the $1 billion mark.
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