Dell confirms that it's exploring IPO, VMware reverse merger

VMware issued its own statement Friday but didn't offer any more details into the potential deal with Dell.
Written by Natalie Gagliordi, Contributor

Dell Technologies on Friday confirmed that it's considering strategic options to boost revenue and raise funds, including combining with VMware on the public market in a reverse-merger scenario.

In a regulatory filing, Dell said its board is evaluating wether to carry on with the existing ownership structure and business as usual; pursue an IPO of Dell Technologies common stock; or a opt for a business combination with its virtualization subsidiary VMware.

The regulatory filing was oozing with Dell's apparent reluctance to divulge this information, with the company writing that it would normally keep deliberations confidential "until a particular course of action is determined, but because Dell Technologies owns ~82% of VMware, we are required to make a public filing with the US Securities and Exchange Commission".

Dell Technologies founder and CEO Michael Dell took his company private four years ago after more than two decades on the stock market in a deal worth $24 billion. In 2016, Dell acquired EMC in a massive $67 billion deal. The agreement also included EMC's majority stake in VMWare, which now has a market cap of around $50 billion.

VMware issued its own statement Friday but didn't offer any more details into the potential deal with Dell.

"We are not in a position to speculate on the outcome of Dell's evaluation of potential business opportunities," said VMware CEO Pat Gelsinger."

"Dell has been a tremendous partner since it became our majority owner and as we've accelerated our growth. We look forward to Dell's continued support as we work to execute our growth plans in the years ahead."

A reverse merger would see VMware buying Dell, instead of Dell buying the remaining 20 percent in VMware that it doesn't already own. A existing lockup provision blocks Dell from buying out VMware until September.


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