The Rising Influence of Rising Affluence

[DewDiligence]

Dell acquires EMC for $67B in cash and tracking stock linked to VMware (which will remain publicly traded):

http://www.wsj.com/articles/dell-to-buy-emc-for-67-billion-1444649012

Dell Inc. and private-equity firm Silver Lake will buy data-storage company EMC Corp. for roughly $67 billion in cash and stock, marking the biggest technology-industry takeover ever.

The $33.15-a-share price tag represents a 28% premium over EMC’s closing price before The Wall Street Journal reported last week that the companies were in talks to merge.

VMware, in which EMC owns about 80%, will remain a publicly traded company. EMC holders will receive $24.05 a share in cash in addition to tracking stock linked to a portion of EMC’s interest in the VMware business. VMware has a market value of about $33 billion. Dell said EMC shareholders are expected to receive about 0.111 shares of new tracking stock for each EMC share.

……The value of the tracking stock may vary from the market price of VMware given the different characteristics and rights of the two stocks…

I thought tracking stocks—highly popular during the tech/biotech bubble circa 2000—were a discredited idea insofar as the shareholders of such a stock have no BoD representation and generally end up getting screwed as a result. However, EMC’s two largest shareholders reportedly wanted to avoid the tax hit from an all-cash transaction.