8-KMaterial AgreementsRegulation FDExhibits & Filings

Dell Technologies Inc. 8-K Report, Material Agreement (Jul 2, 2018)

Filed July 2, 2018For Securities:DELL

Summary

Dell Technologies Inc. has announced a significant recapitalization transaction through an Agreement and Plan of Merger, dated July 1, 2018. This transaction involves a merger where a subsidiary, Teton Merger Sub Inc., will merge with and into Dell Technologies Inc., with Dell continuing as the surviving entity. Holders of Class V common stock will have the option to convert their shares into either 1.3665 shares of Class C common stock or $109.00 in cash per share, subject to an aggregate cash consideration cap of $9 billion. If the cash election exceeds this cap, a pro-rata adjustment will occur, converting a portion of the elected cash shares into stock consideration. This move is the result of the company's evaluation of strategic business opportunities and aims to simplify its capital structure. The merger is contingent upon several closing conditions, including the approval of the Merger Agreement by various classes of Dell stockholders (Class A, Class B, Class V, and all common stock voting together), a special cash dividend from VMware, Inc., effectiveness of a registration statement for the Class C common stock, listing approval for Class C stock on the NYSE, and the absence of any prohibitive laws or material adverse effects. Additionally, the company's charter will be amended to reflect the new structure, and key stockholders, including Michael Dell and Silver Lake, have entered into a Voting and Support Agreement to vote in favor of the transaction and adhere to certain transfer restrictions post-merger. The agreement also includes provisions related to VMware, ensuring Dell will not pursue a business combination with VMware and requires VMware board approval for certain future actions concerning its stock.

Key Highlights

  • 1Dell Technologies Inc. has entered into a Merger Agreement to undertake a recapitalization transaction.
  • 2Holders of Class V common stock can elect to receive either 1.3665 shares of Class C common stock or $109.00 in cash per share.
  • 3The total cash consideration available to Class V stockholders is capped at $9 billion; exceeding this cap will result in a pro-rata adjustment.
  • 4The transaction requires approval from multiple classes of Dell stockholders and is subject to several closing conditions, including a special dividend from VMware.
  • 5Key stockholders, including Michael Dell and Silver Lake, have agreed to support the merger via a Voting and Support Agreement.
  • 6The company's charter will be amended, and Class V common stock will be delisted from the NYSE upon completion of the merger.
  • 7Dell has agreed with VMware not to pursue a business combination with VMware as part of this recapitalization.

Frequently Asked Questions

The primary goal is to simplify Dell Technologies' capital structure following the company's evaluation of strategic business opportunities. This recapitalization aims to streamline operations and potentially enhance shareholder value by consolidating the company's structure.

Holders of Class V common stock have the choice to receive either 1.3665 shares of the new Class C common stock or $109.00 in cash for each share they own. However, the total cash payout is capped at $9 billion. If the total elected cash exceeds this amount, holders who chose cash will receive a pro-rata portion of the cash and the remainder in Class C stock.

Several conditions must be met, including the approval of the Merger Agreement by various classes of Dell stockholders, the successful payment of a special cash dividend by VMware, Inc. to its common stockholders, the effectiveness of a registration statement for the Class C common stock, and the approval of the Class C common stock for listing on the NYSE. Additionally, there must be no prohibitive laws or material adverse effects on Dell or VMware.

Michael Dell and entities affiliated with Silver Lake Partners are significant stockholders. They have entered into a Voting and Support Agreement, committing to vote their shares in favor of the merger and related transactions. They have also agreed to certain transfer restrictions on their shares and have consented to amendments to existing stockholders' agreements.