There are many developments taking place behind the scenes at Dell Technologies. First, the company considered making a traditional IPO. That decision was reversed; instead, VMware’s subsidiary had to repurchase shares from the stock exchange on a massive scale, so that it could once again become a private company. But now there seems to be a plan to go on the stock market again.
That’s what Reuters and The Wall Street Journal are writing today based on sources within the company. Discussions were to be held with various banks in order to work out plans for a possible IPO. It’s a new chapter in the company’s rather confused stock market history.
Stock market rejection
Dell Technologies first planned to buy back trading shares from investors. The company planned to buy back $21.7 billion of shares in VMware. That way, Dell was able to make an IPO through VMware without going through all the formal procedures. VMware is 81 percent owned by Dell. But investors, including the funds Elliott Management Corp, Canyon Capital Advisers and Carl Icahn, had fiercely resisted this.
Earlier this summer, the option of a traditional IPO was rejected by the Dell board, which believed it was over-indebted in order to attract investors. At the same time, investors are arguing that an ordinary IPO would be good for the value of Dell, which is currently performing well.
Large cash flow
According to Reuters, Dell saw its cash flow increase by 45 percent last year. The debt has also fallen sharply. When the company acquired EMC from CEO Michael Dell in September 2016, it still had a debt mountain of $57.3 billion. Meanwhile, it’s dropped to $50.3 billion.
Anyway, Dell will return to the stock market. The main question is, and remains, how this will be done. If Dell does opt for the VMware option, it will in any case infuriate investors in that company. At the same time, the risk of a disappointing traditional IPO is also present.This news article was automatically translated from Dutch to give Techzine.eu a head start. All news articles after September 1, 2019 are written in native English and NOT translated. All our background stories are written in native English as well. For more information read our launch article.