Dell Tech To Amend Proposed Class V Common Stock Transaction

(RTTNews) - Dell Technologies Inc. (DVMT) said Thursday that it 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. As per the final proposal, Class V stockholders can elect to receive for each share of Class V common stock either $120, in cash, subject to an aggregate $14 billion cap, or between 1.5043 and 1.8130 shares of Class C common stock.

Dell Technologies' Special Committee and Board of Directors have unanimously approved the amended proposal. 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.

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 said it 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.

The company noted that 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.

Dell Technologies noted that it 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 to provide up to $5 billion of debt financing.

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.