Dell Is Said to Contact DVMT Investors to Discuss Terms of Deal
Dell has reached out to investors to determine what it would take to win their support for its plans to return to the public markets, according to Bloomberg, citing a person familiar with the matter.
Shareholders, including activist investor Carl Icahn, have balked at the terms of Dell’s proposed deal to take the technology giant public through a $21.7 billion deal involving a tracking stock. For the first time, Dell is acknowledging to investors in the tracking stock, known as DVMT, that the terms may need to be improved to win the necessary support, said the person, who asked not to be identified.
Talks are at an early stage and it was unclear how Dell planned to improve the offer or whether it will proceed with revising the terms, the person said. Icahn and other critics argue that the offer undervalues DVMT shares, which were created to track Dell’s stake in software maker VMware.
Sweetening its offer would mirror a similar twist in Dell’s move to go private in 2013, when the company improved the terms to gain enough investor support. P. Schoenfeld Asset Management, which advises clients owning more than $150 million in DVMT shares, has implored the company to boost its offer by at least 20 percent.
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 its worth. He has since sued in Delaware Chancery Court to force Dell to open its books related to the offer.
Dell Technologies CEO Michael Dell and Silver Lake Partners are offering $109 a share for DVMT. The deal is designed to take Dell Technologies public and to simplify Michael Dell’s tech empire. The company may also pursue a traditional initial public offering.