- Dell jumped as much as 3.88% to $46 Friday as it returned to the public market.
- Dell reentered the public markets without going through the usual initial-public-offering process because it bought back shares tied to its interest in the software maker VMware.
- The acquisition faced strong opposition from billionaire activist investor Carl Icahn, who was VMware’s second-largest shareholder.
- For Dell, buying back DVMT was actually something of a Plan B. Originally, the company was floating the idea of performing a “reverse merger” with VMware, that would see Dell go public by completely taking it over.
Dell jumped as much as 3.88% to $46 Friday as it returned to the public market. It is currently trading up 1.19%, giving it a market cap of almost $9 billion.
The computer maker reentered the public markets, but didn’t go through the usual initial-public-offering process. That’s because earlier this month it paid $23.9 billion ($120 a share) to acquire the publicly traded “tracking” shares of VMware, a listed software maker that was already about 80% owned by Dell. The shares, under the ticker “DVMT,” were born as part of Dell’s complicated deal to buy EMC a few years ago.
Dell’s acquisition of DVMT faced strong opposition from the billionaire activist investor Carl Icahn, who owned an 8.3% stake and was VMware’s second-largest shareholder. Icahn sued Dell last month because of its previous proposed $21.7 billion offer for the tracking shares. He thought the shares were worth $144 apiece – 20% more than the $120 they were acquired for earlier this month.
For Dell, buying back DVMT was actually something of a Plan B. Originally, Dell floated the idea of performing a “reverse merger” with VMware, that would see it go public by completely taking it over.
In February, Morgan Stanley analysts Keith Weiss and Sanjit Singh said such a merger would be “worst case scenario” for VMware shareholders, and Dell ultimately backed down from that plan of action – instead opting to purchase this VMware tracking stock, and go public that way.