Dell sticking with $21.7bn plan to go public despite objections

Dell plans to buy its tracking stock DVMT arguing that the move benefits shareholders

Dell Technologies is sticking with its $21.7 billion plan to go public by buying its tracking stock, DVMT, despite investor Carl Icahn’s objections.

“Dell Technologies continues to believe that the proposed offer for DVMT shares, which represents a 29 per cent premium to the DVMT share price immediately prior to the announcement of the transaction, is fair and in the best interests of DVMT shareholders,” Dell said in an emailed statement Tuesday.

The technology giant released the statement after Mr Icahn said Monday that he would oppose the deal because it undervalues DVMT, in which he owns an 8.3 per cent stake.

Dell Technologies chief executive Michael Dell and Silver Lake Partners are offering $109 a share for DVMT, which tracks Dell's stake in VMware. The deal is designed to take Dell Technologies public and to simplify Michael Dell's tech empire.

An independent committee representing DVMT investors determined the deal “was the best available option” after discussions with about 40 per cent of shareholders and negotiations with Dell, the tech said Tuesday.

It offers shareholders $9 billion in cash as well as an interest in Dell Technologies, it said.

Some investors have baulked at the DVMT buyout, questioning how Dell arrived at a valuation of its own shares.

Its offer of $109 a share in cash and stock values Dell’s new Class C shares at $79.77 – a number that more than doubled during the company’s internal calculations in the months before the deal.

Icahn said the offer values DVMT at about $94 a share, based on his calculations. That’s well below the $144 a share he believes it is worth.

He also described Dell's contingency plan to pursue a traditional initial public offering if DVMT holders reject the deal as an "empty threat" that wouldn't pass a fairness test in Delaware courts. – Bloomberg