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Dell Technologies Sweetens Class V Transaction

November 15, 2018

Final per share offer of $120 cash, subject to an increased aggregate cash cap of $14 billion, or 1.5043-1.8130 Class C shares; increases aggregate implied value to Class V stockholders by approximately $2.2 billion

Binding agreements to vote in favor of the enhanced transaction executed with Dodge & Cox, Elliott Management, Canyon Partners and Mason Capital Management, collectively holding approximately 17% of the Class V common stock

Up to 59% of the total consideration will be payable in cash, increasing certainty of value; variable exchange ratio protects Class V stockholders who receive stock

More robust corporate governance structure and enhanced Class C stockholder rights, including the ability for Class C stockholders, as a class, to elect an independent director

Dell Technologies has agreed with the Dell Technologies Special Committee to amend the proposed Class V common stock transaction to increase the consideration payable to Class V stockholders, following extensive investor outreach and engagement. Under the final proposal, Class V stockholders can elect to receive for each share of Class V common stock either (1) $120, in cash, subject to an aggregate $14 billion cap, or (2) between 1.5043 and 1.8130 shares of Class C common stock, determined as described below.

Given there will be no public market for Dell Technologies Class C shares prior to closing, the variable exchange ratio is specifically designed to provide protection to Class V stockholders on the value of the Class C stock consideration. The exchange ratio will be determined based on (1) the volume weighted average trading price of the Class V shares during the 17-day trading period ending on the election deadline, which is the eighth trading day after announcement that stockholders have approved the transaction, and (2) the total amount of cash consideration that is elected. Appendix A to this release provides further information on the calculation of the exchange ratio.

The revised Class V transaction is a result of significant, detailed input from Class V stockholders and the Dell Technologies Special Committee regarding value, consideration mix and corporate governance. An overwhelming number of shareholders contacted by Dell Technologies supported the revised transaction. Funds affiliated with Dodge & Cox, Elliott Management, Canyon Partners and Mason Capital Management, who collectively owned approximately 17% of the total outstanding Class V common stock on the record date for the December 11, 2018 stockholders meeting, have entered into binding agreements to vote in favor of the revised Class V transaction.

The $120 implied value per share implies a total market capitalization of $23.9 billion for the Class V common stock. The increase in consideration provides Class V stockholders with an additional $2.2 billion in aggregate implied value. Immediately following completion of the proposed transaction, the Class V stockholders will own approximately 17%-33% of Dell Technologies, depending on the amount of cash and stock elections and the final exchange ratio.

The $5 billion increase in the maximum aggregate cash consideration provides those Class V stockholders who would prefer to receive cash with greater value certainty and increases the ability for stockholders to receive their preferred mix of cash and Class C common stock. Approximately 59% of the consideration, equivalent to approximately $70 per Class V share, will be payable in cash if all Class V stockholders make cash elections. Dell Technologies expects to fund the increase in the maximum aggregate cash consideration with up to $5 billion of debt financing. The Company does not expect a ratings downgrade following the incurrence of such financing.

Class V stockholders will continue to have the option to elect Class C common stock, representing a direct economic interest in Dell Technologies, an unmatched technology platform with the most complete portfolio of technology solutions across software, hardware and services. Furthermore, the interests of Class C common stockholders will be aligned with those of Michael Dell and Silver Lake, the two largest holders of Dell Technologies stock who are long-term investors and are focused on driving stockholder value.

Dell Technologies has also enhanced the governance rights associated with the Class C common stock by agreeing that Class C stockholders will have the right, as a class, to elect one director starting at the 2020 annual meeting. Dell Technologies will also establish a Nominating and Corporate Governance Committee, which will select or recommend the Company's nominee for such Class C director. The Board of Directors of Dell Technologies will also select a fourth independent director to be appointed to the Board by June 30, 2019.

Charles Pohl, Chairman of Dodge and Cox, said: "We believe the revised terms announced today align with the best interests of all Class V shareholders. They offer a significantly increased cash consideration and the opportunity to realize long-term potential upside through ongoing ownership of Dell Technologies."

Jesse Cohn, Partner at Elliott Management, said: "We believe this transaction represents a favorable outcome for all Class V stockholders, who will receive greater value certainty through the increased cash component and downside protection on the value of the Class C common stock. Additionally, by simplifying Dell's capital structure, this transaction provides a clear path for Class V stockholders to participate alongside Michael Dell and Silver Lake in what we believe will be substantial stockholder value creation at Dell Technologies over the long term."

Jonathan Heller, a Partner at Canyon, said: "The new terms offer a constructive compromise that we believe benefits all stockholders. The revised deal and the increase in cash consideration for Class V stockholders demonstrate Dell and Silver Lake's positive outlook on the prospects for Dell Technologies' future."

Dell Technologies' Special Committee and Board of Directors have unanimously approved the amended proposal. Dell Technologies' Special Committee, which represents the interests of the Class V stockholders, unanimously recommends that the Class V stockholders vote "FOR" the proposed transaction as it believes the proposed transaction is fair to and in the best interests of the Class V stockholders. The Dell Technologies' Board of Directors unanimously recommends that all stockholders vote "FOR" the proposed transaction as it believes the proposed transaction is fair to and in the best interests of all stockholders.

"We're excited about the opportunity ahead for Dell Technologies and we're excited to share that opportunity with our public investors," said Michael Dell, Chairman and CEO of Dell Technologies. "Dell Technologies has an unmatched portfolio of leading solutions to support customers' digital transformation. We are driving integrated innovation from the edge to the core to the cloud, and we are delivering outstanding financial performance. We put forward a very attractive offer and look forward to the stockholder vote."

Egon Durban, Managing Partner and Managing Director of Silver Lake, commented: "As we have previously stated, Silver Lake remains an enthusiastic long-term stockholder of Dell Technologies. We recently reaffirmed our commitment with the announcement that we have received approval from our investors to complete a fund-to-fund transaction that will allow us to extend our investment horizon in Dell Technologies. We believe Dell Technologies remains an attractive long-term investment opportunity as a result of the dramatic transformation the Company has completed since we initially partnered with Michael more than five years ago."

David Dorman and William Green of the Special Committee commented: "With the significant increase in value and enhanced deal terms announced today, including at least an additional $2.2 billion of overall value, an additional $5 billion in cash consideration, enhanced downside protection through the collared floating exchange ratio and the right to elect a Class C member of the Board of Directors, our conviction in this transaction has grown. Notably, the increased cash consideration to up to $14 billion represents 59% of the total consideration, substantially increasing certainty of value for DVMT stockholders. The Special Committee, with the support of stockholders representing approximately 17% of shares outstanding, continues to believe that the proposed transaction represents the best option for all Class V stockholders and recommends they approve the transaction."

Dell Technologies has received commitments from Barclays, BofA Merrill Lynch, Citi, Credit Suisse, Deutsche Bank Securities Inc., affiliates of Goldman, Sachs & Co., J.P. Morgan, Morgan Stanley & Co. LLC, RBC Capital Markets and UBS Investment Bank (in alphabetical order) to provide up to $5 billion of debt financing. With its robust cash generation, Dell Technologies will continue to benefit from a strong balance sheet and ample financial flexibility following the proposed transaction with $6.7 billion of cash and investments on its balance sheet (excluding publicly traded subsidiaries and after adjusting for the $600 million September debt paydown) and approximately $4 billion in undrawn revolver capacity as of the second quarter of fiscal year 2019. The Company will continue to focus on debt repayment and achieving an investment grade corporate credit rating while making the right investments in the business.

The proposed transaction remains subject to approval by the Class V stockholders representing a majority of the voting power of the outstanding Class V common stock other than those held by affiliates of Dell Technologies. The proposed transaction is also subject to other customary closing conditions. The stockholder vote for this transaction remains scheduled for December 11, 2018 and it is expected to close by the end of 2018.

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