Dell Technologies, Michael Dell, and their private equity backers at Silver Lake can’t dodge a lawsuit challenging the US$24 billion deal that consolidated Dell’s control of VMware by converting one class of shares into another and capping the number that could be redeemed for cash, a Delaware judge ruled Thursday, June 11.
In 2016, the Companysought toacquire EMC Corporation, a data-storage firm. One of EMC’s most valuable assets was its ownership of 81.9% of the equity of VMware, a publicly traded cloud-computing and virtualization company. The Company wanted to pay cash to acquire all of EMC, but the Company remained highly indebted after the leveraged buyout and could not fund an all-cash deal. Instead, the
Company proposed to acquire EMC using a combination of cash and newly issued shares of Class V common stock, which would trade publicly and track the performance of a portion of the equity stake in VMware that the Company would own as a result of the deal. The Company and EMC ultimately completed a transaction that valued EMC at $67 billion.
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