Dell Confirms Exploring IPO, Potential Combination With VMware

Dell Technologies Inc. Confirms That It Is Still Considering Options, Including An Initial Public Offering Or A Combination With VMware Inc.

In a presentation on Friday, Dell said it has evaluated potential business opportunities, but has not yet made a decision on what to look for. While an initial public offering or a combination with VMware is on the table, Dell does not include the sale of a company to third parties. Dell may also decide not to make any changes, the company said.

"Nothing has been decided yet and the alternatives are being considered at this point," Dell said in a separate presentation.

VMware shares fell 1.9 percent to $ 123.33 at 10:20. in New York, the company estimates around $ 50 billion. DVMT, a tracking inventory that mimics the value of VMware without giving the holders voting or ownership of the asset, also declined.

After years of a creative corporate structure and financial maneuvers, Michael Dell is finally ready to put all parts of his technological empire under a public roof. The Dell management has considered its potential for such a move, either through an initial public offering (OPV) or a purchase by the publicly traded VMware, who are familiar with the matter. Billionaire Michael Dell controls VMware and owns his namesake.

The CEO of VMware, Pat Gelsinger, said in a statement that the company "is unable to speculate on the outcome of Dell's evaluation" about business opportunities.

"I think there is a shelf that they will pursue, an initial public offering, or they could (cloud computing companies) sell for VMware crucial and thus get some liquidity," said Kirk Materne, analyst at Evercore ISI. "A reverse fusion does not make much sense, it's a big distraction to VMware's business and it's about keeping talent."

The unification of the Empire would simplify the ownership structure of the company and simplify the management of Dell's corporate debt using VMware's balance sheet and cash generation.

The current structure is involved. Dell Technologies, Round Rock, Texas, has acquired $ 67 billion in assets with the acquisition of EMC Corp., which holds a controlling interest in VMware. The remainder of the VMware shares are publicly traded, as are the DVMT tracking stocks.

If Dell seeks to partner with VMware, its assets would be used to help acquire the privately held company, people familiar with the matter said. The merged entity would also subsume the tracking inventory, they said.

Dell's purchase of EMC almost tripled the company's debt at that time. Before becoming private in 2013, Dell had a debt of less than $ 7 billion, according to Bloomberg. On November 3, the company had approximately $ 48.5 billion in bonds and loans.

The union of the two companies would also expand what they can do for the clients. Dell sells computers and storage devices that companies use to run business applications and store data. VMware is the leading provider of virtualization software that helps companies reduce costs by combining applications and tasks on a single server device.