Dell Technologies is planning to go public again after five years of being private and investing heavily in expansion to selling hardware, software and data center services.
The company announced on Monday that it would pay USD 21.7 billion in cash and stock to buy back shares tied to its interest in software company VMware. The company further added that the agreement values its equity between USD 61.1 billion and USD70.1 billion. This value is more than twice the value of the USD 24.9 billion deal that Michael Dell, the founder and CEO, and buyout firm Silver Lake settled for to take the company private in 2013.
This would mean two things essentially, one Dell will bypass the route of IPO and will not have to raise any new money. It will pay for the deal by issuing new shares, and with a USD 9 billion dividend it will receive from VMware. If Dell went through the IPO route it would have raised flak for the debt of USD 52.7 billion.
Post the deal, the CEO will own 47 percent to 54 percent of the combined company, while Silver Lake will own between 16 percent and 18 percent, as per a regulatory filing.
In 2016, Dell paid USD 67 billion for the storage hardware company EMC, and software companies VMware and Pivotal. This deal had helped the company cope with the lower sales of personal computers. This is not the first time post going private that Dell tried to go public again. There were reports of a reverse merger also where Dell would sell itself to VMware.