Deal of the Century?

When PC pioneer Michael Dell took his company off the stock exchange eight years ago, many had already written him off. Now Dell is making the comeback of the year - with one of the biggest corporate spin-offs of all time. The deal makes him the ruler of two stock market giants.

US entrepreneur Michael Dell is a few billions of dollars richer since Monday. His company Dell Technologies is giving up the 81 percent stake in the software subsidiary VMware and thus creating a listed company with a market value of almost 64 billion dollars, according to the newspaper Financial Times.

As part of the spin-off of VMware, Dell Technologies passes on the share to the Dell shareholders who thus receive shares of VMware into the custody account. VMware, in turn, pays a special dividend of twelve billion dollars to its shareholders - 9.5 billion dollars of which will end up with Dell.

Since Michael Dell personally still holds 52 percent of Dell Technologies, he collects almost five billion dollars in cash dividends. In addition, Michael Dell still holds around 41 percent of the company after the spin-off of VMware - together with US investor Silverlake (11 percent), he controls the majority of VMware.

"Dino" Dell was already said to be dead - and is now back with two stock market giants.

It is the brilliant comeback of the tech investor Michael Dell. Who once took the battered PC manufacturer Dell off the stock exchange and renovated it. He then took over the chip manufacturer EMC and the software company VMware on credit, then returned to the stock exchange with Dell Technologies, discharged VMware, now split off from Dell again and thus now created two stock market whales, each of which he is the largest shareholder.

Dell personally holds 52 percent of the $75 billion company Dell Technologies, 41 percent of the $64 billion newcomer VMware.

Behind the spin-off of VMware is a financial construct that the Austrian version of the business magazine "Forbes" already calls "Deal of the Century". The deal shows how Michael Dell recognized at the decisive moment where the technology industry is moving. To understand this, a look into the past is necessary.

Founded by Michael Dell in 1983, the company was once the largest PC manufacturer in the world. But in the early 2000s, the group was in crisis, and sales of PCs declining. Many competitors, customers and analysts have had already written off the company.

In 2013, the Texan decided to buy the company together with the private equity company Silver Lake for around $25 billion and took it off the stock exchange. It was the largest leveraged acquisition in the technology sector ever - and the beginning of one of the most impressive comebacks in tech history.

Three years later, Dell acquired the storage specialist EMC for around 67 billion dollars, including the software company VMware, a virtualisation specialist founded in 1998 in the USA with currently around 34,000 employees. According to Forbes, the group borrowed a total of around 70 billion dollars in loans in order to finance the deals - more than hardly any other US company ever before. As with the delisting of Dell, the entrepreneur took full risk.

When EMC was acquired in 2016, the subsidiary VMware remained listed on the stock exchange as an independent division using the stock exchange vehicle "Tracking Stock". This gave Dell the opportunity to return its company to the stock exchange in 2018 without an Initial Public Offering (IPO) - as Dell Technologies. He used the tracking vehicle instead.

With the acquisition of EMC or VMware, Michael Dell proved the right nose, after all, the amount of data to be processed increased enormously. When the founder took the PC veteran off the stock exchange in 2013, it was only valued at 3.8 billion dollars. According to "FT", Dell's remaining hardware activities today have a value of 33 billion dollars. In total, Dell was valued at around $85 billion before the spin-off. After the spin-off, the two individual parts together are worth significantly more. Michael Dell is thus the architect of the "biggest buy-out coup of all time", as "Forbes" continues.

"Forbes" still estimates Dell's assets at 55 billion dollars, which currently puts him in 18th place on the list of the richest Americans. This could change in the next few days - Dell has a good chance of being one of the risers of the year in that Forbes ranking at the end of the year.