Dell is about to be public again, but its CEO says there are no plans to merge with VMware (DVMT, VMW)

Michael Dell

Dell Technologies announced Monday it is returning to the public markets through a deal to buy DVMT, a stock that tracks VMware, a Dell Technologies subsidiary.
Despite buying VMware's tracking stock, Dell Technologies doesn't plan to merge with the virtualization software maker, company CEO Michael Dell told CNBC on Monday.
Instead, both companies will operate largely independently and their stocks will trade separately.
Dell Technologies had previously explored the possibility of a reverse merger with VMware, in which it would be acquired by the publicly-traded smaller company.

Dell Technologies is going to be a publicly traded company again, thanks, in a way, to VMware.

But that doesn't mean it plans to merge with its independent subsidiary or that VMware's days of having its own publicly-traded stock are numbered.

Dell Technologies looked into whether it should combine the two businesses, company founder and CEO Michael Dell said Monday in an interview with CNBC's "Squawk on the Street." But it decided that VMware will continue to operate largely independently and its stock will continue to trade separately from Dell Technologies'.

"I love VMware," Dell told CNBC. "We want it to remain an independent public company. VMware is doing great."

VMware's executive team, led by CEO Pat Gelsinger, have done a "fabulous job," and the company's business should get a big boost from Dell's 40,000-person-strong sales team, he said.

"VMware is extremely well positioned," he said.

Dell Technologies owns 81% of VMware.

The company's return to the public markets comes five years after it went private through a $25 billion buyout by its founder and the investment firm Silver Lake. More recently, Dell Technologies has been itching to return to the public markets and has been exploring several different possibilities.

One such scenario, which the company floated earlier this year, would have involved a reverse merger in which the smaller VMware would have acquired Dell Technologies. But Wall Street frowned on that prospect, so Dell Technologies decided instead to buy out VMware's tracking stock, DVMT, announcing the deal Monday morning.

The company made the deal so it could simplify its capital structure, Dell said on CNBC.

"It's been too complicated, he said. "We have an extraordinary business that's doing incredibly well. We're winning, and so, it's a great time to ... do this."

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