Dell and Silver Lake opportunistically laid out a deal to retire it at a huge discount, which made Wall Street’s policemen-billionaire foil Carl Icahn and Paul Singer’s Elliott Management-irate. The tracking stock representing 53% ownership of VMWare could not keep pace with its soaring stock, at times trading at discounts of about 40%. And, yet again, Dell and Silver Lake found an undervalued asset to pounce on. VMWare’s value soared as cloud computing infrastructure filtered into IT departments worldwide. The hidden gem was EMC’s 81% ownership of VMWare, a pioneer in the virtualization of corporate technology infrastructure. The acquisition added scale to Dell’s infrastructure businesses and gave it control of a handful of valuable subsidiaries like cybersecurity company RSA and cloud software company Pivotal. In 2016, they orchestrated the massive $67 billion takeover of technology conglomerate EMC, a company more than twice its size. Dell and Silver Lake won the brutal fight by increasing their price slightly.Īfter spending a few years paying down the $15 billion in debt used to finance the LBO, Dell and Silver Lake then found an even and more undervalued target. Billionaire activist Carl Icahn cried foul, organizing a group of shareholders to resist the takeover. Instead of spending years trying to rebuild enthusiasm for the stock, Dell partnered with Silver Lake on a record-setting buyout, rolling his shares and a $750 million of his cash into the deal. With $9 billion in cash at the time, Dell’s PC business and its heavy investments in software and technology infrastructure were undervalued. The holding was valued at a pittance from Dell’s heyday, but it represented an opportunity. When Dell took his company private in 2013, he owned 15.6% of its total stock outstanding, worth about $3.6 billion based on the terms of the LBO.
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