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Opinion
Matt Levine

Dell Will Issue a Lot of Not-Quite-Stock to Pay for EMC

If you have to go public reluctantly, this is the way to do it.

How should you think about Dell's acquisition of VMware? I mean, Dell is acquiring EMC, and that is reasonably straightforward, as these things go. There are oddities, mostly to do with the debt financing of the deal. But, basically, it's a big levered deal, combining "the industry’s leading innovators in digital transformation, software-defined data center, hybrid cloud, converged infrastructure, mobile and security." Fine, sure, makes total sense.

But Dell is also acquiring VMware. Sort of! VMware is a separate public company, but EMC owns about 81 percent of it, and controls about 97 percent of its votes. So by acquiring EMC, Dell is also acquiring control of VMware. But then it is giving 65 percent of VMware back to EMC's shareholders. Again, though: Sort of! It is actually giving them a tracking stock that references VMware.