Dell went private back in 2013 to reorganize without quite so much external pressure to perform. Now, however, it’s ready to go public once again.
The company has unveiled a plan to buy its own tracking stock in a $21.7 billion deal that, in exchange, will offer a new class of public stock on the NYSE. The move won’t change Dell’s control over VMware (which it took when it bought EMC), but it could help Dell pay off its debt at a faster rate than it has so far.
Part of the reason Dell may be going public now is that the company is doing much better than when it went private. Revenue in its most recently completed quarter rose 19% to $21.4 billion while the company’s net loss fell by 55% to $500 million. Adjusted earnings before interest, taxes, depreciation, and amortization rose 33% to $2.4 billion.
Dell had been exploring any number of options for going public, including reports of an unusual reverse merger where it would have sold itself to VMware. The company acknowledged these in one of its news releases, pointing out that it had considered a “negotiated business combination” with VMware in addition to an IPO and the share exchange you’re seeing now.
It’s safe to say that a lot has changed for Dell in five years. While its signature PC business is still very much intact, it has considerably more to offer to the business crowd between EMC, VMware and other services. Dell isn’t as fragile as it was back in 2013, which is no doubt a relief to Microsoft — it loaned Dell $2 billion to protect the “long-term success of the entire PC ecosystem,” and that cash commitment appears to have paid off.
