Dell agreed to pay $24.05 in cash for each EMC share, along with 0.111 of the new tracking in VMware. Based on the value of VMware’s ordinary shares, the tracking stock is worth a notional $8.37 for each EMC share. While that puts the full, theoretical value of the offer at $32.42 a share, EMC’s shares closed on Tuesday at $28.99
“Based on VMW intraday stock price of $74.46 and assuming a 30% discount to the tracking stock, we believe the deal value is $29.85, which represents 3.2% premium to EMC intraday stock price of $28.92. Conversely, based on the current share prices of EMC and VMW, the market appears to be valuing the tracking stock at about 40% discount,” wrote Wells Fargo in a research note to investors.
The combined company shares would trade with the symbol DVMT from September 7, noted the firm.
Buy Tracking Stock?
the issued shares of Class V Common Stock will initially have a one-to-one relationship to approximately 65% of the number of shares of VMware common stock currently owned by EMC. Denali currently anticipates issuing approximately 223 million shares of Class V Common Stock.
EMC currently owns approximately 343 million shares of VMware common stock, representing approximately 81% of the outstanding common shares of VMware. reflect the economic performance of an approximately 53% economic interest in the VMware business.