Dell Planning to Merge with Subsidiary VMware, May Pursue Initial Public Offers
Private tech giant Dell has continued to headline the tech industry due to possible strategies that the company will engage in to offset a massive debt that it incurred last 2015. Dell's latest proposals point out that the company may merge with VMware.
VMware is a subsidiary of Dell, and the company may fully merge with it as one of the many options to reorganize its financial standing. Dell owns 82 percent of VMware, and while the company expressed its desires to keep proposals private, because of the inclusion of VMware in the stock market, the company had no choice but to submit a public filing in the U.S. Securities and Exchange Commission (SEC).
It should be noted that Dell, which was withdrawn from the stock market in 2013, is currently the biggest private tech company in the world. "We would normally keep our 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 U.S. Securities and Exchange Commission," Dell stated in the SEC filing.
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Dell acquired the majority of VMware after its 2015 deal that absorbed the debt of EMC Corporation. Dell acquired EMC for $67 billion, and it has failed to meet financial goals to date. While Dell owns the majority of VMware, the tech company still operates independently with its own chief executive and board of directors.
The merger with VMware will pave the way for the company to access around $11 billion, which can help trim its debt that currently stands at around $52.5 billion.
Besides merging with VMware completely, the company is contemplating on two other ways to go about the reorganization of its corporation. One would be to pursue an initial public offering (IPO) and make Dell public again. Creating an IPO may boost the company's profit with the help of shareholders.
Another would be to stand pat and continue the status quo, which many analysts believe that is the least likely thing to happen due to the reformation of the U.S tax law, which heavily disfavors Dell.
As it currently stands, it will either be an IPO or a merger with VMware.
