Dell’s acquisition of IT storage specialist EMC
may have been notable for the huge price tag ($67 billion) but
its use of one of the more unusual types of equity offerings
has caught the market's attention too.
In addition to an initial $24.05 per share payout, EMC
shareholders received tracking stock whose value is linked to
the performance of its cloud software division, VMware. The
unit is one of EMC’s many businesses, all of which
were part of the takeover – these include security
company RSA, software specialist Pivotal and big data analytics
Dell has hinted in various official documents that it did
not have the necessary cash to fund the acquisition of EMC and
of its various businesses, so issued so-called tracking stocks
to bridge the funding gap. They account for a significant
portion of EMC’s 81% share in VMware.
Dell's EMC takeover is...