Dell Technologies plans to buy $21.7 billion in shares of VMware's tracking stock and will offer a new common stock to trade on the New York Stock Exchange, the company announced Monday. What this equates to is Dell once again trading as a public company without having to make an initial public offering, as Fortune explains.
Through the move, VMware will remain a separate publicly traded organization, but Dell will retain its 81% common stock ownership.
- As Dell noted in the announcement, the pivot to trade publicly will simplify its capital structure. It means Dell could have a new way to purchase other companies without having to offer just cash, Reuters reports.
Dell spent the last five months working with financial and legal analysts to figure out what to do about the future of the company. Reports of complicated corporate maneuvers circulated, including options to go public, acquire the rest of VMware or go through a "reverse merger."
Dell's return to the New York Stock Exchange will come five years after Chairman and CEO Michael Dell, who owns 72% of its common shares, took the company private along with private equity firm Silver Lake. This allowed Dell to restructure and navigate a complicated technology market outside of the public purview, which can often be unforgiving.
In 2016, Dell's purchase of EMC made waves in the enterprise technology community, but it also added a significant amount of debt — more than $55 billion — to the company's balance sheet.
Dell is a massive enterprise IT shop and is vying to become a single place where customers can purchase enterprise computing services. By becoming public it will have room for further growth and more strategic acquisitions that could pivot the focus to R&D and future technology.