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Dell Technologies to buy out VMWare tracking stock

This step is the culmination of a strategic review that Dell has been pursuing for several months, as it has sought to consolidate its complex ownership structure without overloading its balance sheet, which is in arrears of about $ 50 billion. Dell said it would offer to exchange each stock of VMware tracking shares for 1.3665 shares of Dell Technologies Class C ordinary shares or in the holder's election in the amount of $ 109, provided that the total amount of money does not exceed 9 billion US dollars.

The deal represents a premium of 28.9 percent to the closing price of Dell on Friday.

Dell's shares rose 10.7% to $ 93.6. In premarket trading, VMWare shares rose 12.3% to $ 165.

The cash component of the proposal will be financed by a one-off special dividend of $ 11 billion, which VMWare will pay in proportion to its shareholders, VMWare reports.

After the transaction, VMware's shareholders will own between 20.8% and 31% of Dell, depending on how many investors prefer cash, Dell said.

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