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Dell reverses course, going public in $21.7B proposal

Apple rival Dell on Monday announced plans to take the PC maker public again, by way of a proposed common stock deal pegging its market cap at $21.7 billion.

Michael Dell with Apple co-founder Steve Jobs.

Michael Dell with Apple co-founder Steve Jobs.


VMware's tracking stock holders will be able to claim 1.3655 shares of the new common stock, Dell said, or else $109 in cash per share up to $9 billion in aggregate. The deal adds a 29 percent premium to Dell's closing price as of last Friday.

The VMware board of directors has declared an $11 billion cash dividend pro rata for all of its shareholders, contingent on completing other terms of the deal. Dell is expected to claim $9 billion from the dividend.

In a statement, Dell noted that the transaction "simplifies capital structure," and "positions Dell Technologies to build on its growing strategic and financial strength." The company will continue to own 81 percent of VMware's common stock.

Any leftover cash from the transaction will be used for future share buybacks or to pay down Dell's debt. VMware shareholders should end up owning anywhere between 20.8 and 31 percent of Dell, depending on how many people opt for cash instead of new shares.

Dell went private in 2013, giving CEO Michael Dell a majority stake in his namesake company. In all the transaction was valued at $24.4 billion, aided by a variety of sources, including a $2 billion loan from Microsoft.

The executive said going private would give his company the "time, investment, and patience" to make progress. It has increasingly shifted towards the enterprise market, particularly through its 2016 EMC takeover.

The company remains one of the biggest PC makers in the world, for instance beating the likes of Apple, Asus, and Acer in the laptop market. PC sales have struggled to maintain ground though given the growing flexibility of smartphones, tablets, and game consoles.