Building off of this momentum, the company is looking to exchange each share of its Class V tracking stock for 1.3655 shares of Dell Technologies Class C common stock. On Monday, it announced plans to buy the shares that track its stake in the fast-growing software company VMware Inc.
VMware is surging in early trading.
Private equity behemoth Silver Lake, which partnered with Michael Dell to take Dell private in the largest private equity buyout in technology industry history, said it would maintain its entire 24 percent stake in Dell Technologies as part of the transaction. This will bring common stock of Dell Technologies to be listed on the New York Stock Exchange (NYSE).
The transaction represents a premium of 28.9 percent to the closing price of the tracking stock on Friday.
Dell Technologies' share of the dividend will be approximately US$9 billion which the company said it intends to use to finance the cash payment to DVMT shareholders with the remainder, if any, being used to pay down debt. The company said it has also paid down $13 billion of gross debt since its combination with EMC back in 2016.
In a separate announcement Monday, VMware said it was giving an $11 billion special dividend to shareholders tied to the completion of the Dell Technologies deal. The company has sought a symbiotic relationship with its hardware and software - chasing closer integrations between the two and selling both to customers to extract higher profit margins.
As CEO, Dell has been pushing the company, which missed out on the cloud-computing wave early on, to develop new solutions to enable the internet of things, in which everyday devices will be digitally connected and businesses will need more computing power away from centralized data center. The companies also sell each other's products.
"After the transaction concludes, I am looking forward to VMware's continued independent status, strategy and capital allocation policy for organic investment, M&A and shareholder returns". That meant Dell would be beholden to the whims of public markets, perhaps laden with short-term pessimism over the company's urgent need to find a transition. And for DVMT shareholders who opt for Dell Technologies Class C common stock rather than cash, "there should be a significant amount of upside" given its current low valuation, she said.