Dell Still Has Some Explaining to Do on Its Deal Math
Dell Technologies Inc.’s deal debrief was supposed to provide some answers, but instead it’s only raised more questions.
The computer giant this week detailed the deliberations behind its plan to buy out the DVMT tracking stock it created in 2016 to finance its takeover of data-storage company EMC Corp. Dell estimates its stock-and-cash bid is worth $109 per share, and that hasn’t sat right with DVMT investors. For one, that represents a big discount to the VMware Inc. shares DVMT is meant to mimic. The $109 number is also derived in part from an assessment of Dell’s worth that many investors doubt. Dell’s management was reportedly confident the proxy statement would help back up its valuation math. It wasn’t a game changer, though.
Shares of DVMT barely budged after the late Monday release of the mammoth 300-plus page filing. They closed on Tuesday at $93.70, well below the purported offer price. Most notable for me in the proxy filing was the stark contrast between Dell’s negotiations with the VMware special committee and the group of its own board members tasked with representing the interests of DVMT holders.