Deals
Why Dell Is Using Tracking Stock for Its EMC Bid
- One quarter of the purchse price rests with VMWare security
- Say in corporate governance is left out in such arrangements
Mega Tech Merger: Dell to Buy EMC for $67 Billion
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About a quarter of Dell Inc.’s $67 billion valuation for EMC Corp. hinges on a type of security that most of Wall Street considers an artifact of the technology bubble: tracking stock. Should anyone be concerned?
Roughly $9 of the $33.15 a share takeover price will be conjured by allowing EMC holders to hang on to the company’s stake in Palo Alto, California-based software maker VMware Inc., acquired 11 years ago. Rather than just handing over the stock, Dell will issue securities designed to mimic shares of VMware that are already publicly traded. In effect, EMC holders get a market for shares they couldn’t previously touch -- although they won’t exactly own them, either.