Dell is offering EMC $27.25 a share in cash plus tracking stock in VMware, boosting the value per share to more than $30, representing a $50B+ takeover attempt
sources Jessica Guynn / USA Today : EMC shares up on report Dell offering $27.25 a share and VMware tracking stock Jonathan Vanian / Fortune : Report: Dell makes blockbuster offer to buy EMC Rachel King / ZDNet : Report: Dell offering EMC nearly $30 per share in rumored takeover
Context & Ripple Effects
This report is the opening bid in what became the largest tech acquisition on record: two days after Re/code's scoop of the $50B+ structure, Dell and EMC announced the deal confirmed at about $67 billion, with an Andreessen Horowitz analysis arguing its implications reach well beyond storage hardware.
The structure is the story: Dell is paying partly with a new VMware tracking stock rather than cash alone, which immediately put pressure on VMware's standalone valuation — VMware shares fell 10% on preliminary Q3 revenue of $1.67B the day the news broke.
First-order effects
- EMC shareholders are being asked to accept a hybrid payout — $27.25 in cash plus VMware tracking stock worth over $30 combined — making them owners of both Dell and a slice of VMware rather than cash sellers outright.
- VMware public investors take the first hit: the company dropped 10% following the announcement as markets repriced the risk of VMware being subsumed into a leveraged Dell-EMC combination.
Second-order effects
- The tracking-stock component becomes the deal's flashpoint — EMC and VMware shareholders are already demanding changes, including a VMware stock buyback and shutting down Virtustream, before the deal closes.
- VMware's independent-market premium gets structurally impaired by the tracking stock, forcing Dell to eventually buy back the tracking shares and re-list on the NYSE under DELL in December 2018 to restore a clean equity story.
Third-order effects
- If this pattern holds, mega-deals in enterprise IT will increasingly be financed with exotic instruments — tracking stock, debt, spin-out conditions — trading headline price for closing certainty, with shareholder revolts as the recurring cost.
- The three-year arc from $67B megamerger to relisted pure-play shows tracking stock functioning as temporary M&A scaffolding: useful to bridge valuations at signing, expensive enough that acquirers unwind it once leverage allows.
The trend: Enterprise-infrastructure consolidation is scaling into mega-deals whose financing structures — not just their prices — determine whether they hold together, with VMware as the recurring asset everyone builds around.