DVMT Dell Technologies Inc. Class V (delisted)

By Micah Maidenberg 

Dell Technologies Inc. confirmed it is raising its offer to buy out an affiliate, a move that comes after the company faced pressure from large investors to sweeten the bid.

The PC maker and data-storage company said Thursday its new offer for owners of DVMT, which tracks the value of Dell's stake in software maker VMware Inc., implies a value of about $24 billion. The offer includes up to $14 billion in cash, with the remainder coming in a swap for new shares. The purchase of the tracking stock would help return Dell to public markets after it was taken private in 2013.

Dell's prior offer implied a value of almost $22 billion, including $9 billion in cash. Putting more cash on the table will increase the certainty of value for shareholders in DVMT, Dell said in a statement.

In 2015, Dell set up the tracking to help it finance its takeover of data-storage company EMC Corp., the company that owned, at that time, the majority of VMware. Tracking stocks allow companies to expose specific business units to public markets, potentially increasing their visibility and value.

The Round Rock, a Texas-based company, expects the current owners of DVMT to own between 17% to 33% of the new publicly traded Dell, depending on cash and stock elections.

The Wall Street Journal reported Wednesday that Dell planned to increase its offer.

Some large investors were considering voting against the company's initial offer at a special vote scheduled for Dec. 11.

Dell said the new proposal has support from key owners of the tracking stock including Dodge & Cox, Elliott Management, Canyon Partners and Mason Capital Management. Together, those shareholders own 17% of DVMT.

BlackRock Inc., which owns a more than 4% stake in DVMT, is also supportive, according to people familiar with the matter.

A representative of activist investor Carl Icahn, who owns a 9.3% stake in DVMT, didn't respond to a request for comment about the new offer. On Wednesday, Mr. Icahn said that future owners of the publicly traded Dell should have the right to elect at least three independent directors to the company's board.

Dell also agreed to allow owners of the future publicly traded Dell shares to elect an independent member to the company's board.

Shares in DVMT rose 0.3% to $106.03 in Thursday trading.

Cara Lombardo contributed to this article.

Write to Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

November 15, 2018 12:26 ET (17:26 GMT)

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