#EMC STOCK BLACKOUT PLUS#

Wall Street has also been wary of the complex financial engineering used to hold together the heavily indebted group. As part of the spinoff, VMware is paying a special dividend to shareholders of about $12 billion, helping Dell lighten a remaining net debt load that stood at $32 billion at the end of July. In other moves to try to appeal to a wider group of investors, Dell has said it will start paying a dividend.ĭell has been weighed down by debt after borrowing about $70 billion to finance its dealmaking.

It was reported last week that the deal had hit a snag when the banks requested more time to arrange the loans amid tightening credit markets.ĭell Chairman and CEO Michael Dell and EMC Chairman and CEO Joe Tucci have been adamant that the deal was progressing as planned and would close within the original timeline.After the spinoff, Dell will be “a simpler company with a better capital structure,” said Krish Sankar, an analyst at Cowen. To make the EMC acquisition work, Dell intends to take on up to $49.5 billion in debt from a group of banks including Credit Suisse, JP Morgan, Barclays, Bank of America, Citi, Goldman Sachs, Deutsche Bank and RBC Capital. The value of the tracking stock will be determined around the time the merger closes, based on the value of VMware shares in the days prior to the closing. If the deal were to close today, the more than 40 percent decline in VMware's share price would necessitate a corresponding decline in the value of the tracking stock.Ī Dell spokesman said the EMC acquisition price of $24.05 per share was 'locked, that doesn't move, but because VMware has moved down, the value of the portion of the merger consideration linked with the tracker is going to be in that range of decline.' Now, its market cap is about $19.2 billion, and its stock price is hovering around $45.54. 9, the last business day before the Dell-EMC announcement was made, VMware, 80 percent of which is owned by EMC, had a market capitalization of $33.2 billion and a stock price of $78.65 a share. That share price has dropped precipitously since the deal was announced. The VMware tracking stock is intended to 'track' Dell's economic interest in VMware, and the value of that stock will fluctuate based on VMware's share price. All that matters is that the deal happens, or doesn't, and since we have no control over any of that, we just have to stay focused on things that we do well.' 'Sounds like the price is going down,' said one Dell and EMC partner, who added, 'It shouldn’t matter to us what Dell pays or what EMC shareholders get. At the time, it was estimated that the tracking stock would be worth about $9.10 a share.

#EMC STOCK BLACKOUT PLUS#

When the deal was announced in mid-October, the $67 billion price tag was the result of Dell's agreement to pay EMC shareholders $24.05 per share for EMC, plus 0.111 shares of Denali tracking stock tied to VMware's performance. The Friday filing by Denali Holding Inc., the holding company for Dell, seeks to clarify the effect VMware's falling stock price will have on the Dell-EMC merger.

In an SEC filing, Dell noted that 'the market value' of the VMware tracking stock has 'declined, thereby reducing the implied value of the stock portion of the merger consideration.' The total value of the blockbuster acquisition has dropped by nearly $8 billion from $67 billion as originally proposed to $59.5 billion, according to numbers provided by Dell. Securities and Exchange Commission (SEC) asked the company to clarify language about the risks involved in the merger. Dell is warning investors that a whopping $14 billion drop in the market capitalization of VMware is going to negatively affect the final price of the blockbuster acquisition of EMC.Ī Dell spokesman said the U.S.

Emc stock blackout