
Dell could emerge as a public company through a reverse merger with VMware - QUFB
https://www.cnbc.com/2018/01/29/dell-is-considering-a-sale-to-vmware-in-what-may-be-techs-biggest-deal.html
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chimeracoder
I can't wait for Dell to go public again, so that we can someday have a repeat
of the last private buyout debacle, in which banks literally couldn't keep
track of who owned Dell stock[0], and Dell shareholders simultaneously argued
that the stock price was too high while _also_ suing for it being too low....
and won[1].

[0] [https://www.bloomberg.com/view/articles/2015-07-14/banks-
for...](https://www.bloomberg.com/view/articles/2015-07-14/banks-forgot-who-
was-supposed-to-own-dell-shares)

[1]
[https://www.bloomberg.com/view/articles/2016-06-01/michael-d...](https://www.bloomberg.com/view/articles/2016-06-01/michael-
dell-bought-his-company-too-cheaply)

~~~
airstrike
Appraisal rights lawsuits are essentially trolling in the M&A world. It's a
nuisance markets, bankers, lawyers and courts have to deal with, but they're
not relevant to anyone who isn't a party to the deal.

Dell going public again in no way indicates there will ever be another private
buyout. That may or may not happen, and both the market and the industry have
changed much since Michael Dell took it private.

Different groups of shareholders argued different things... appraisal rights
are weird, and at the end of the day 99% of people in Finance will argue that
the judge's decision on that case is entirely inconsistent with even the most
basic principles of corporate finance and capital markets. Just because one
guy who happens to have the power to decide the lawsuit's ultimate fate says
his version of the facts is right doesn't mean he is _in fact_ correct.

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AcerbicZero
I do DevOps, with a heavy focus on the Infrastructure side, and there is a
comical amount of misinformation buried throughout that article.

I don't have the background to comment on the reverse-merger, but the VMware-
AWS partnership is generally regarded as a smart move, giving Amazon access to
enterprise customers who weren't moving to the cloud, and giving VMware a way
to get in on that sweet Cloud OpEx budget.

VMware has been doing a pretty good job of being the SDN one stop shop for
companies that want that, and selling SDN components a la carte where
required.

~~~
Blackstone4
I heard from Dell/Silver Lake that NSX was super hot and could be a major
revenue earner for them. Is that true?

~~~
AcerbicZero
I've been told its a big deal for VMware, and from my personal experiences its
been popping up everywhere lately.

I did recently just get my NSX VCIX, and handled several large scale
implementations of NSX, so I might be a little too biased to tell if its
really taking off, or if it's just a big deal in my little part of the pond.

Either way, it's a neat piece of technology, and I enjoy playing with it :)

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Blackstone4
Dell has a large debt load (not quite as much as some of the news outlets are
reporting because they have something like $15bn+ in cash).

The change in tax code makes debt more expensive because you can't offset all
of the interest. However most private equity executives believe that with the
drop in corporate income tax, the effect is roughly net neutral. Not quite
sure what the situation is for Dell.

I imagine a big motivator for Dell to buy VMware is to unlock the cashflow.
They can then use the cash to pay down the debt. Including VMware, the debt
load on as a multiple of EBITDA is roughly 3.5-4.0x net debt/EBITDA which
isn't that high.... for PE

At the moment they own ~80% of the company but can't access the cash even
though they book the profits on a look through basis.

~~~
Blackstone4
They have ~$47bn debt with ~$18bn in cash. Giving them a net debt of ~$29bn

[https://investors.delltechnologies.com/news-releases/news-
re...](https://investors.delltechnologies.com/news-releases/news-release-
details/dell-technologies-reports-fiscal-year-2018-third-quarter)

------
bryanlarsen
The title is misleading, perhaps a mod could switch to the subtitle fragment
"VMware could buy Dell in massive reverse-merger"

While legally it would be VMWare buying Dell, practically Dell already
controls VMWare. The manoeuvre is a reverse IPO, a way for Dell to go public
without the rigmarole.

~~~
acct1771
Of course you mean go public _again_.

...didn't Michael spend a lot of time and angst going public, for long-term
success' sake?

~~~
jonknee
He did, but the corporate tax cut was funded partially by giving less
preferential treatment to debt (only being able to deduct 30% of the interest)
and Dell was taken private with tons of debt. The takeover of EMC added tons
more debt.

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dzonga
Dell goes public, bet they'll start making shitty PC's again. In 2012 I had 3
of their 'high' end pc's die on me. Btw, I was just a noob CS/CE college
student tinkering around with software. Couple of years later 2016, after they
went private, noticed my friend's Dell XPS developer edition had, what I would
say good quality. Not top notch, like Lenovo high ends or Macbooks but
definitely decent.

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yeukhon
The Dell-EMC merger was reported at $67B by cash and stock. I am not sure how
much Dell paid out in cash, but I am imagining something like 10,20% were paid
to the major shareholders, and the rest were just stock shares? How does this
cash + stock payout work in practice?

~~~
mcintyre1994
Apparently Dell has $50B debt, maybe a large chunk was cash? Unless that's
private buyout debt I guess.

~~~
Blackstone4
They have "cash and investments balance of $18.0 billion"

[https://investors.delltechnologies.com/news-releases/news-
re...](https://investors.delltechnologies.com/news-releases/news-release-
details/dell-technologies-reports-fiscal-year-2018-third-quarter)

------
tyingq
Would be nice. I don't know what happened when they went private, but they are
hard to deal with now. 3rd party VARS regularly underbid them for the same
exact equipment. And the salespeople can't get out of their own way, seem
frustrated, etc.

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r0m4n0
I can’t get over the rumor mill... Friday, VMware stock jumps 20% on word that
Dell would buy the remaining 20% of VMware to then IPO. As of this morning the
opposite is leaked and VMware may buy Dell and the shares slide 16% the other
direction. Many articles say that the board is going to meet later this month
to decide. It’s amazing that tens of billions of dollars in value swing on a
few unsubstantiated whispers. There may be some truth to it but I don’t think
we are any closer to knowing

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prbunny
Check out how many insiders at VMWare dumped their stock in last 12 mos vs
prior 4 years.

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redwood
I read this as "public cloud company" originally...then realized it just said
"public company".

I wonder if public cloud could be in the cards though. Merge with HPE,
Rackspace and maybe even Cisco and be a dinosaur public cloud play competing
with IBM for scraps?

~~~
tyingq
They all started private clouds, but as far as I know, only IBMs
Bluemix/SoftLayer survived. For some reason, there's no real competition in
that space.

I would guess there are enough overly cautious CIO types out there to support
a "big" competitor to Bluemix.

Though, I'm hoping Amazon's announcement for official support for K8S starts a
new era where public cloud providers actually compete, and drive down things
like ridiculous egress pricing. If the public cloud is affordable, the need
for hybrid/private/etc drops down.

~~~
toyg
_> They all started private clouds_

I see this from the inside professionally and I’m not surprised by the
outcome. Amazon, Microsoft and Google are basically unmatchable. IBM likely
survives on incompetent managers paying more to ensure they don’t get fired,
but nobody else has that advantage.

Kids, don’t play datacentre at home.

~~~
tyingq
Right...but it stifles progress a bit by encouraging stodgy F500 companies to
stay with colo arrangements or worse.

Non elastic, or high egress cost apps are still too expensive to run on public
clouds. Or, the transition period, where you're half in/half out, kills you
because of overpriced egress.

~~~
toyg
_> Non elastic, or high egress cost apps are still too expensive to run on
public clouds._

Unfortunately for the sector I'm in, this is becoming less and less true every
few months. Besides, a lot of managers simply don't care, they'll just
compensate higher opex with a few redundancies, it doesn't matter - their
capex budget goes down, they cash the big bucks, and if apps don't work it's
the nerds' fault.

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TroubleTicket
Never going to happen because of conflicts, VMware makes too much revenue from
HPE

~~~
mythz
Dell acquired EMC in 2015 and already owns 80% of VMware. This is just talking
about DELL doing a "reverse-merger" with VMware as a way to get back into the
public markets.

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revelation
This is like those dotcom boom "all shares" sales or two companies contracting
each other to record revenue.

No wonder they are both tanking if upper management is fully occupied playing
valuation games and swapping chairs.

