EMC May Float Pivotal in IPO Next Year | Re/code

A Pivotal decision

"Why the hurry? Two reasons. One motivation may be the need to pay down the massive pile of debt — about $50 billion – that Dell will have on its books once the EMC deal closes. Depending on how Pivotal is valued, an IPO could raise billions in new capital that could go toward speeding up what Michael Dell has described as a “massive delevering” he expects to carry out over two years after closing on EMC.

Second, the new capital generated by a Pivotal IPO would supplement some of the funding lost by the decline in VMware shares since the Dell-EMC deal was announced. Dell has offered EMC shareholders $24.05 in cash plus a fractional share of new tracking stock linked to VMware for every share of EMC they own. In August, VMware shares traded at prices north of $90 a share. Since the Dell-EMC deal was announced, the shares have declined by about a third. They closed Friday at $60.15. Dell has offered tracking shares in order to offset additional debt it would otherwise have to raise in order to buy out all of EMC."

EMC May Float Pivotal in IPO Next Year | Re/code