What's going on?
It’s public, it’s private, it’s public again: Dell’s going public for the second time, by buying out stockholders in its subsidiary – at an almost 30% premium to last week’s price (tweet this).
What does this mean?
Dell’s a pretty complicated creature. In 2013, its founder and a private equity firm took it private. Then, in 2016, it bought a company that owned 82% of a software business, VMware, and created shares for investors to own some of that part of the business. Basically, they could own part of one of Dell’s subsidiaries, but not Dell itself.
Now, Dell’s offering investors in its VMware stock the opportunity to sell in exchange for cash – or newly-created shares in Dell itself, which they’ll be able to buy and sell on the New York Stock Exchange. Shareholders who accept the offer will end up owning some of Dell (which will still own 82% of VMware), and… ta-da! Dell will be public again.
Why should I care?
For markets: Dell and VMware go together like a keyboard and mouse.
Dell’s the yin to VMware’s yang – they deal in hardware and software, respectively. Dell’s tied its computers up with VMware’s software, often selling them as a package. Investors seem to approve of Dell’s latest escapade – both Dell’s VMware stock and the other VMware stock (the remaining 18% that Dell doesn’t own) rose on Monday’s news.
The bigger picture: Going private FTW.
In its five years as a private company, Dell’s made some positive changes to its business and strengthened its financial position. It grew its revenue by 19% in the last quarter – no small feat considering that rivals Lenovo, Acer, and even Apple didn’t grow theirs at all – and is increasing its market share (this very newsletter was composed using a Dell monitor). Going private is one way that companies try to get more freedom and flexibility, away from the prying eyes of investors.