Dell Technologies’ Strategic Review and Reaches Agreement to Exchange Class V Tracking Stock for Equity or Cash Election Option


Simpson Thacher is representing Dell Technologies Inc. and Silver Lake Partners in connection with a transaction to simplify Dell Technologies’ capital structure by eliminating its publicly traded Class V tracking stock, which mirrors the performance of Dell Technologies’ subsidiary, VMware, Inc. (NYSE: VMW).

Dell Technologies has reached an agreement with its Special Committee of independent directors to exchange each share of its Class V tracking stock for 1.3665 shares of Dell Technologies Class C common stock, or at the holder’s election, $109 in cash, subject to the aggregate amount of cash consideration not exceeding $9 billion. Following the exchange, Dell Technologies Class C common stock will become publicly listed on the New York Stock Exchange.

In connection with the transaction, VMware’s board of directors, on the recommendation of a special committee of its directors, voted to declare an $11 billion cash dividend pro rata to all VMware stockholders contingent on satisfaction of the other conditions to the completion of the transaction. Dell Technologies’ share of such dividend will be approximately $9 billion, which will be used to finance the cash consideration paid to Class V stockholders, with the remaining cash proceeds, if any, being used to fund future share repurchases or debt pay-down.

The transaction is expected to close in the fourth quarter of 2018.

The Simpson Thacher team includes Rich Capelouto (Picture), Ben Schaye, Naveed Anwar, Kelli Schultz, Janet Kyung Ah Yu, Mark Underwood, Bob Zhao, Sangitha Palaniappa and Jay Higdon (M&A); Andrew Keller, Ken Wallach, Dan Webb, Hui Lin, Tony Rim and Loren Shokes (Capital Markets); Jennifer Hobbs, Adam Shapiro and Cristina Gonzalez (Credit); Jonathan Karen and Townshine Wu (Funds); Katharine Moir and Jacqueline Clinton (Tax); Jennifer Nadborny and James Rapp (Public Company Advisory Practice); and Tristan Brown and Erin Murphy (Executive Compensation and Employee Benefits). Summer Associates Carrie Huang and Daniel Feiger also provided valuable assistance.

Involved fees earner: Rich Capelouto – Simpson Thacher & Bartlett; Ben Schaye – Simpson Thacher & Bartlett; Naveed Anwar – Simpson Thacher & Bartlett; Kelli Schultz – Simpson Thacher & Bartlett; Janet Kyung Ah Yu – Simpson Thacher & Bartlett; Mark Underwood – Simpson Thacher & Bartlett; Bob Zhao – Simpson Thacher & Bartlett; Sangitha Palaniappa – Simpson Thacher & Bartlett; Jay Higdon – Simpson Thacher & Bartlett; Andrew Keller – Simpson Thacher & Bartlett; Kenneth Wallach – Simpson Thacher & Bartlett; Daniel Webb – Simpson Thacher & Bartlett; Hui Lin – Simpson Thacher & Bartlett; Tony Rim – Simpson Thacher & Bartlett; Loren Shokes – Simpson Thacher & Bartlett; Jennifer Nadborny – Simpson Thacher & Bartlett; James Rapp – Simpson Thacher & Bartlett; Jennifer Hobbs – Simpson Thacher & Bartlett; Adam Shapiro – Simpson Thacher & Bartlett; Cristina Gonzalez – Simpson Thacher & Bartlett; Jonathan Karen – Simpson Thacher & Bartlett; Townshine Wu – Simpson Thacher & Bartlett; Katharine Moir – Simpson Thacher & Bartlett; Jacqueline Clinton – Simpson Thacher & Bartlett; Tristan Brown – Simpson Thacher & Bartlett; Erin Murphy – Simpson Thacher & Bartlett;

Law Firms: Simpson Thacher & Bartlett;

Clients: Silver Lake; Dell Technologies;