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MarketWatch MarketPulseNov 15, 2018
Dell Technologies sweetens offer for tracking stock
Dell Technologies Inc. said Thursday it is sweetening its proposed offer to buy out an affiliate and return to public markets, after facing strong pushback from shareholders. The company said shareholders of DVMT, which is meant to track Dell's stake in the fast-growing VMware Inc. software unit, will now be offered $120 in cash, subject to a cash cap of $14 billion, or 1.5043 to 1.8130 Class C shares for each share owned. The move increase the aggregate implied value to Class V shareholders by about $2.2 billion, the company said in a statement, confirming an earlier report in the Wall Street Journal. The company has binding agreements to vote in favor of the sweetened deal from Dodge & Cox, Elliott Management, Canyon Partners and Mason Capital Management, which between them own about 17% of the Class V common stock. "Given there will be no public market for Dell Technologies Class C shares prior to closing, the variable exchange ratio is specifically designed to provide protection to Class V stockholders on the value of the Class C stock consideration," said the statement. The $120 implied value per share implies a market cap of $23.9 billion for the tracking stock. The Class V shareholders will end up owning about 17% to 33% of Dell Technologies, depending on the cash and stock elections and final exchange ratio. The company will fund the sweetened offer with debt financing. It will further enhance governance rights for the Class C shareholders by allowing them to elect one director starting at the company's 2020 annual meeting. The vote for the deal is still scheduled for Dec. 11 and is expected to close by year-end. Shares rose 1.1% premarket and have gained 30% in 2018, while the S&P 500 has gained 1.1%.

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