Dell agrees to pay $1 billion to settle VMware shareholder lawsuit
On the morning of November 17, Beijing time, it was reported that Dell agreed to settle a lawsuit related to the acquisition of software company VMware for $1 billion. Dell is currently controlled by founders Michael Dell (Michael Dell) and PE Silver Lake.
Although Michael Dell and Silver Lake were willing to pay 1 billion dollars to settle the lawsuit, the investment generated tens of billions of dollars in profits for them.
In 2013, they took Dell private at a valuation of $25 billion, and Dell bought software company EMC for $67 billion in 2015, when EMC was a major shareholder in VMware. Instead of paying cash for EMC, Dell issued tracking shares to EMC shareholders.
The case dates back to 2018, when Dell re-entered the stock market through a reverse merger, valuing it at about $100 billion.
Dell owns most of the shares in VMware, a listed software company, and when Dell goes public again, it uses "tracking stock" to represent Dell's ownership of VMware. To go public, Dell swapped privately held shares and cash for VMware tracking shares, valuing the acquisition at $24 billion. Some big-name investors are involved in the deal, holding tracking stocks such as Elliott Management, Carl Icahn and BlackRock.
VMware shareholders took Dell to court in 2019, arguing that Michael Dell, Silver Lake and other Dell executives tried to drive down market valuations of tracking stocks and use tough coercive measures to push reverse mergers through before most independent tracking shareholders approve the deal.
Dell responded that the independent board committee approved the settlement, while Silver Lake declined to comment.
The suing shareholders also reached a settlement with the investment bank Goldman Sachs. Goldman declined to comment after shareholders thought Goldman helped and abetted Dell and Silver Lake behind the scenes.
In addition, at the beginning of this year, chipmaker Broadcom announced its acquisition of VMware, valued at $70 billion, and the deal is not over yet.
