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Here's what is happening with VMware and Dell Today – The Motley Fool


What happened

Dell Technologies He completed his trip back to the public markets last Friday acquiring all the pending Dell Technologies Class V (NYSE: DVMT) stock The transaction also affects VMware (NYSE: VMW), which Dell controls with an approximate participation of 80%. VMware paid shareholders a single Friday dividend of $ 11 billion on Friday as part of the agreement, with most of that payment going to Dell.

Dell shares grew 3.4% at 1:30 p.m. EST, while Class V shares are no longer listed. VMware shares were down 14.3% from Friday's closing, reflecting the payment of the special dividend. Today is the date of the former dividend. Adjusted by the special dividend, VMware's stock increased by around 3%.

Dell workstations.

Source of the image: Dell.

And what

The stock of Dell Class V was a tracking inventory designed to track the performance of the Dell company in VMware. The broadcast was originally issued as part of the Dell agreement to acquire EMC, which was closed in 2016. EMC had 81% of VMware before it was purchased by Dell.

Dell successfully changed an effective mix of new class C shares for all pending class V shares on Friday. The company paid $ 14 billion in cash and issued about 150 million of class C shares to remove the stock tracking. The movement greatly simplifies Dell's corporate structure, and led Dell to public markets without the need for a public offering.

Class V shareholders had the option to receive $ 120 in cash or 1,8066 C class shares for each class V action, up to an aggregate income limit of $ 14 billion. More than 90% of shareholders chose the cash option, while the rest choose the option to participate. Because the cash limit has been exceeded, the shareholders that opted for the cash will receive a portion of their payment in class C shares. The cash option was the intellectual movement Lightweight, with stocks of the class C stock that are currently traded around $ 47 per share.

As part of the transaction, VMware paid a special single dividend for a total of $ 11 billion. The dividend will be paid to shareholders registered at the close of business on December 27, with a payment date of December 28. December 31 is the date of the former dividend. The payment of $ 11 billion is reduced to $ 26.81 per share.

"Dell Technologies was created to be the essential infrastructure company for this digital age, and with today's announcement, we are aligning the interests of our interest groups to benefit from the integrated innovations and value creation of our entire business family, "said Dell CEO Michael Dell in the press release announcing the completion of the transaction.

Now that

With tracking stocks and Dell in public markets, investors can bet on the company in general, not only in their participation in VMware. Dell's revenues have been growing rapidly, with year-on-year growth of 15% in its fiscal third quarter. But the company is still involved with a considerable amount of debts. As of November 29, Dell had about $ 48,700 million and $ 17,500 million in cash. The dividend received from VMware will pay part of the cash part of the purchase of tracking values.

VMware now has a little less money in cash after paying the single dividend. The total cash as of November 29 was $ 13,500 million, along with about $ 4 billion in debts. This agreement will make the balance of VMware much weaker.

After having been deprived in 2013 and creating its complex stock structure a few years later to fund the EMC offer, Dell has discontinued these movements and is once again a public company As there is everything to see on this occasion.

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