Dell Is Near Deal to Win Support of Tracking Stock Holders

(Bloomberg) -- Dell Technologies Inc. is close to agreeing a deal with some of the top shareholders of its tracking stock that would guarantee their support for the company’s plan to return to the public markets, according to people familiar with the matter.

The improved terms under deliberation would include an increased cash component and could value the tracking stock, known as DVMT, at about $120 to $130 per share, said the people, who asked not to be identified as the details aren’t public. Some investors had balked at Dell’s initial offer to DVMT holders in June, which valued their holdings at $109 a share in cash and Dell stock.

One additional item that’s being discussed is the possibility that representatives of some of the shareholders could join Dell’s board, the people said.

The share ratio and precise valuation may change depending on how the market values Dell’s stock once it starts trading, the people said. No final deal has been reached and talks may fall apart, they said.

A representative for Dell declined to comment.

Activist investor Carl Icahn, who owns a 9.3 percent stake in DVMT, took credit for the potentially better terms in a statement Wednesday, in which he said shareholders must also have the right to elect three independent directors to Dell’s board.

"Given Michael Dell’s questionable corporate governance record and disregard for minority shareholders, it is imperative that DVMT shareholders are given basic corporate governance rights," Icahn said. "Without this corporate governance, we believe the rumored offer is worth less than its headline price."

Icahn has been the main dissenting voice among holders of the tracking stock, claiming the deal that was originally proposed undervalues the shares that track Dell’s stake in VMWare Inc. The billionaire has said he will do “everything in my power” to stop the proposed merger, which would see Dell’s stock traded on the public markets for the first time since 2013.

It’s not the first time Icahn and Dell have clashed. Icahn also opposed Dell’s efforts to take his namesake company private in 2013 before Dell and Silver Lake increased their offer and got the deal done.

--With assistance from Nico Grant.

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Michael Hytha

©2018 Bloomberg L.P.