Dell's shareholders on Tuesday voted to make the company public after five years of being a private company. The decision is expected to simplify the raising capital and to allow Dell to pursue stock-based acquisitions, which in turn will help the company to grow further by gaining IP and expertise it needs. In addition, by going public Dell is going to gain mid and long-term institutional investors, reducing pressure on the management. Dell’s shares will return to New York Stock Exchange in late December.

A $23.9 Billion Deal

In a bid to become a public company, Dell needs to unify all of its assets first. To do so, the company needs to acquire all of the tracking stock of subsidiary VMWare (DVMT), a company that it controls following the acquisition of EMC in 2015. On Tuesday the majority of investors voted for the deal, under which Dell will acquire the stock at $120 per share. The transaction will cost Dell $23.9 billion, which will be paid in cash and Dell stock. The cash part will be financed by Dell and a special dividend by VMWare. To a large degree, Dell will essentially need to buy back stock of the subsidiary it controls. In turn, this will allow Dell to become a publicly traded company without an IPO because VMWare is essentially a public trading company.

There is a rationale behind Dell’s moves. In 2013 in a bid to transform itself from a PC maker to a large high-tech company akin to IBM or HP, the company went private in order to break free from conservative institutional investors who are first and foremost focused on the balance sheet. This gave Dell the freedom it needed to reorganize internally and purchase the necessary outside talent and firms.

After the acquisition of EMC and VMWare, Dell became a leading supplier of PCs, servers, storage, software, cloud services, and so on. This has changed Dell's position in the market substantially, and the company's hope is that with its new business focus, traditional long-term investors will now consider Dell differently than back in 2013. This despite its $52.7 billion debt leftover from its acquisition of EMC for $67 billion three years ago. Meanwhile, the company still needs money to acquire smaller players to stay relevant in the long term.

Always Changing

Dell is not new to transformations. Originally started as a private PC workshop in a dorm room in 1984, Dell began to expand globally by the late eighties. The company was among the first to adopt online sales of built-to-order PCs in the mid-1990s and was rapidly gaining market share till mid-2000s despite economic turmoil of the late nineties and dot-com crash in the early-2000s. In the process the company has outlived numerous rivals, including Compaq, Gateway, IBM’s PC business unit, Packard Bell and many others, who were acquired or forced to leave the market. For a number of years Dell was the No. 1 PC maker in the world. Around the time, Dell also began to sell its own servers, televisions, PDAs, printers, and other products expanding beyond desktops and laptops.

Because of commoditization of the PC market, Dell’s direct sales model ceased to thrive starting from mid-2000s as many consumers preferred to buy laptops from retailers, which mostly carried PCs from Dell’s rivals. In a bid to become competitive again, Dell had to close down its manufacturing facilities around the world, including the U.S. and start relying on contract makers of electronics, just like other PC makers, in 2008 – 2009. Meanwhile, the company never returned to the top spot on the PC market, partly because it was not lucrative enough and partly since Dell wanted to lessen its reliance on PC business.

In a bid to renovate the company once again, Michael Dell decided to make it private in 2013 and successfully did so later that year with the help of Silver Lake Partners, Microsoft, Blackstone Group, Carl Icahn, and others. While being private, Dell acquired EMC and VMware and transformed itself internally in a bid to become a vertically integrated company that provides a variety of devices and services. As ironically as it might seem, in a bid to continue its transformation, Dell needs to become public once again, which is exactly what it is doing.

Dell’s shares will reappear at NYSE under the ticker “DELL” on December 28, 2018.

Related Reading:

Sources: Dell, Bloomberg, Statesman, Reuters

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  • JoeyJoJo123 - Wednesday, December 12, 2018 - link

    Lol, how long before they go private again due to pressure from shareholders negatively affecting the company's strategic decision making? Reply
  • Mr Perfect - Wednesday, December 12, 2018 - link

    Shortly after the shareholders demand constant corner-cutting and drive sales away due to poor quality products and lack-luster support. Reply
  • Yojimbo - Wednesday, December 12, 2018 - link

    Unlikely, unless they can do it without heavy leveraging, because the Trump tax reforms reduced the size of tax deduction that may be taken due to interest paid on debt. Reply
  • Manch - Wednesday, December 12, 2018 - link

    We've seen this rodeo before... Reply
  • Quantumz0d - Wednesday, December 12, 2018 - link

    Dell privatization didn't make Dell to go beyond space and innovate. Instead they went trash, look at the XPS lineup it was like HP Voodoo and top quality rival to their 2006 Alienware acquisition. And after 2013 the Privatization the Alienware systems used rPGA Socket and MXM for the CPUs and GPUs respectively, the M18x R2 ( Avenger series) and M17x family and the M15x (which came with 260M now capable to run a GTX 970M flawlessly) and M17x R5/AW17 R1 ranger the last of rPGA socket and MXM can run a P5000 Quadro MXM or an MSI non standard 1070N or a Zotac 1070/1060 + RX580 MXM.

    Similar to the likes of P570WM or P77x / P870 beasts, without any throttling issues. But with the Past privatization they went to earn billions and do this M&A and pi$s on the people, their latest Aurora machines with Z170 can't even be upgraded to the 7700 series or the Z270 can't be upgraded to 8000 CFL. Also a lot of PSU issues, BIOS lockdown. Cheap Mobos.

    Alienware was totally bastardized past that Haswell 17R1, XPS has FET issues like Razer and AW latest machines throttle to 100C its fine according to their CEO Frank Azor.

    Dell is a steaming pile of feces in consumer land ofc thanks to the thin and light syndrome disease from Apple.

    I don't have a shred of hope that Former Alienware will ever return on XPS, a shame that Engineer driven system is now transformed to MBA exec driven system.

    A few threads that will further help to understand what I'm saying..

    http://forum.notebookreview.com/threads/how-dell-c...

    http://forum.notebookreview.com/threads/official-a...
    Reply
  • Opencg - Wednesday, December 12, 2018 - link

    I fully agree with this. I purchased an alienware 17r2 only to find that throttling down to 800mhz cpu was considered normal operation by thier tech support. And many systems were in place to both convince consumers that this was normal and prevent actual replacement / repairs of these systems. After tactically getting them to actually service my system and recieving 4 different mobo / cpu / gpu replacements I realized that this was an issue with literally EVERY 17r2 that was made. A gaming laptop that throttles to less performance than something with integrated graphics BY DESIGN. Sold by dell. I am happy to say that I did not return my 17r2 when they gave me a 17r4 that acutally worked. I can only think of the poor bastard they would have sold my old 17r2 to. Screw dell. Screw Frank Azor. Reply
  • PeachNCream - Wednesday, December 12, 2018 - link

    I'm not surprised. Going private may have taken some shareholder heat off the C-level in the past, but the reality of the stock market today is that index funds are much larger than individual investors. Companies like Vanguard hold vast swaths of the market on behalf of both big and small time individuals that simply don't have much of a voice and don't directly interact with the companies they have in their portfolios. Reply
  • sonny73n - Wednesday, December 12, 2018 - link

    I went to Best Buy last week to get a Dell Ryzen 5 laptop. They had it on display side by side with a Intel Core i5 one. Both were same model (13” 7000 series) and probably released at the same time but the i5 is in a newer chassis with thinner bezel display, while the Ryzen is in an older chassis. Both have the same specs but the i5 cost $150 more. I went back home empty-handed wishing the Ryzen would be in the same chassis as the i5.

    I wonder if investors make the company public, will Dell be able to help Intel monopolize the market again?
    Reply
  • imaheadcase - Wednesday, December 12, 2018 - link

    Dell still is one of my go-to places for monitors. For some wild reason no other company offers a no-frills monitors that just works and looks great..and has a solid stand! Its pretty silly to see these 24+ inch monitors still using cheap plastic stands..when dell uses the awesome sturdy ones. Reply
  • FreckledTrout - Wednesday, December 12, 2018 - link

    Oddly I do just the same. I'm typing this looking at a Dell U2715H which is a beautiful no frills monitor. Reply

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