US: VMware investor calls potential Dell merger a “terrible deal”

According to a report by Bloomberg, VMware (VMW) shareholder Jericho Capital sent a letter to the company calling the potential reverse merger with Dell a “terrible deal.”

In a letter, Jericho Capital and its affiliates which jointly hold a 1.8% stake in VMware, said that a reverse merger would derail the company’s current prospects. The resulting public company wouldn’t appeal to its growth-oriented investor base and would likely trade at a steep discount to what it would as a standalone firm, according to the letter.

Jericho Managing Member Josh Resnick said in the letter that such a deal would benefit only Dell’s interests by servicing its debt with VMware’s cash flow instead of funding buybacks or other acquisitions.

“Even the most casual observer can see that VMW gains nothing by saddling the company’s faster growth, net cash, highly strategic software business with the dead weight of Dell’s slower growth, heavily debt-laden, legacy hardware-dependent entity,” Resnick said, referring to the company.

Full Content: Bloomberg

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