Tin box shifter Michael Dell is warning investors that the $14 billion drop in the market capitalisation of VMware is playing havoc with his attempt to get cash for EMC.
A Dell spokesman said the total value of the blockbuster acquisition has dropped by about $10 billion from its original $67 billion, to $57 billion.
In an SEC filing, Dell noted that “the market value” of the VMware tracking stock has “declined, thereby reducing the implied value of the stock portion of the merger consideration”.
On October 9, the last business day before the Dell-EMC announcement was made, VMware, 80 percent of which is owned by EMC, had a market capitalisation of $33.2 billion and a stock price of $78.65 a share. Now, its market cap is about $19.2 billion, and its stock price is hovering around $45.54.
A Dell spokesman said the EMC acquisition price of $24.05 per share was “locked, that doesn’t move, but because VMware has moved down, the value of the portion of the merger consideration linked with the tracker is going to be in that range of decline”. Whatever that means.
