Dell Touts Bullish Outlook to Win Over Investors Before Listing

(Bloomberg) -- Dell Technologies Inc., the world’s largest private technology company, tried to shore up investor support for its $21.7 billion plan to return to public markets with a glowing self-assessment.

Chief Executive Officer Michael Dell touted the strength of the business at an analyst meeting on Tuesday in New York. The event is one of the final opportunities for the hardware maker to sell the deal to some skeptical existing holders, as well as convince new investors to get on board when it becomes public again.

“Dell Technologies is outperforming the competition, gaining share and growing faster than the industry,” Dell said. “We’re managing this company with discipline, with focus; with a focus on growth and cash flow and efficient capital structure.”

Some investors have balked at the proposed transaction, Bloomberg has reported, with an offer price of $109 a share in cash and Dell Class C stock that will be traded for the tracking stock DVMT, meant to track Dell’s stake in software maker VMware Inc. The offer values Dell’s Class C shares at $79.77, more than some tracking-stock holders think it’s worth. Presentations from Dell’s top executives highlighted the company’s dominant market share in some information technology segments and bullish outlook on future growth.

“We think the offer on the table is an extraordinarily fair offer,” Chief Financial Officer Tom Sweet said. “The value equation makes a lot of sense given what you’re hearing about Dell Technologies and the growth story going forward.” If tracking-stock holders vote down the proposal, Dell will return to status quo and continue to run the business, Sweet added.

Dell’s estimate of its own equity value jumped almost $29 billion from a valuation marked in November 2017 used for employee compensation and the deal presentation in July, according to the company’s proxy filing. The increase was partly based on “the significant improvement in Dell Technologies’ business momentum,” and “an improved long-term financial forecast,” according to the filing.

Round Rock, Texas-based Dell expects its total addressable market to expand to $3.6 trillion in five years, from $3.1 trillion, Vice Chairman of Products and Operations Jeff Clarke said.

Dell needs a majority of DVMT holders outside of the tech company to support the tracking-stock buyout. The company said it will release a final proxy statement in the coming weeks, and a vote is expected later this year.

New shareholders will be investing in a very different company from the one that delisted five years ago. Besides Dell’s diversification into faster-growing areas of the technology market, investors will now have far less voting power than they once did.

To contact the reporter on this story: Nico Grant in San Francisco at ngrant20@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Molly Schuetz, John Lauerman

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