Dell Technologies shareholders on Tuesday voted to take the Round Rock, Texas-based tech giant public after five years as a private company.
Based on a preliminary vote tally, shareholders approved the reverse merger – valued at more than $23.7 billion – which industry analysts expected would pass. The vote means Dell will once again be a public company through common shares, and it will simplify the stock structure of the company and its cloud computing subsidiary VMware.
Shareholders of more than 61 percent of Dell Technologies’ Class V common stock, excluding affiliates of Dell, voted in favor of the complex plan, according to a news release from the company.
The deal won’t be done through a traditional initial public offering – the usual option, which hands over substantial control to the open market – but through an unusual avenue created by Dell’s 2016 purchase of data storage giant EMC Corp.
“We appreciate our stockholders’ support. With this vote, we are simplifying Dell Technologies’ capital structure and aligning the interests of our investors,” chairman and CEO Michael Dell said in a written statement. “This strengthens our strategic position, as we continue to deliver innovation, long-term vision and integrated solutions from the edge to the core to the cloud. We’ve created Dell Technologies to be our customers’ most trusted partner in their digital transformation.”
The company expects Dec. 28 to be the projected closing date of the deal and first day of trading for the Class C common stock under the ticker symbol “Dell.”
Dell Technologies is the largest private employer in the Austin metro area, with about 13,000 workers in Central Texas.
The company first announced in July that it would buy out shareholders of a tracking stock formed through the EMC acquisition to create a new class of publicly traded common shares. The tracking stock, which trades under the tracker DVMT, has mirrored Dell’s 81 percent ownership in VMware, the cloud computing subsidiary it has controlled since taking over EMC.
Tuesday’s vote means that Dell will once again become the area’s largest publicly traded company – a title Michael Dell backed away from when he took the company private in 2013.
In a 2013 interview with the American-Statesman, Dell said: “It’s easier, more fun and great to be a private company.”
“We’re kind of at the start of a great new journey and we have our destiny in our control. We have incredible people. We have great assets. We have a strong brand and we have tremendous opportunity and we couldn’t be more thrilled,” Dell told the Statesman at the time.
Away from Wall Street’s watchful eye, Dell worked on its transition from PC-maker into a wide-ranging, full-service technology company. It made huge bets on data storage, cloud computing and software, and completed its $67 billion acquisition of EMC in 2016. The acquisition is the biggest information technology merger in history.
Dell also gained majority ownership of VMware through its purchase of EMC.
So far, Michael Dell’s bet on taking the company private seems to be paying off. In the company’s latest earnings report – which Dell continued to report because of its tie to publicly traded VMware – Dell reported a 15 percent growth in revenue for its fiscal third quarter, increasing from $19.56 billion a year ago to $22.5 billion. VMware also beat both profit and revenue estimates.
Dell, who owns 72 percent of the company’s common shares, will remain as chairman and CEO under the new plan approved by voters Tuesday. Investment firm Silver Lake Partners will keep its 24 percent minority stake.
Now, the company will face additional reporting and regulatory rules, but industry analyst Rob Enderle expects the impact to be mostly positive.
“We’ll probably be discovering with them what will and will not be allowed,” Enderle said of the plan that does not include a traditional IPO. “The reason they’re doing it this way is so that they can have their cake and eat it too.”
Dell will be able to attract a more lucrative group of employees with a stock, according to Enderle.
“That’s the goal here – to limit the cost of being public, but still have much of the benefit of being public,” he said.
And although shareholders easily approved the deal Tuesday, it hasn’t been without controversy.
Dell initially offered to pay $21.7 billion in cash and stock to buy back shares tied to its interest in VMware, a decision that received pushback from a number of investors who called on Dell to increase the offer.
In response, billionaire hedge fund manager Carl Icahn sued the company. Icahn, who owns a 9.3 percent stake in Dell, called the deal a “conflicted transaction that benefits the controlling stockholders, at the expense of the DVMT stockholders.”
Icahn dropped the lawsuit on Nov. 15 after Dell increased the value DVMT shareholders would receive in the deal by about $2.2 billion, raising what shareholders would receive to $120 per share from its previous offer of $109.
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