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Dell Technologies Inc. (DVMT) shares surged Monday after the group said it would offer to swap stock that tracks its VMware Inc. (VMW - Get Report) subsidiary for either cash or shares in the computer group controlled by founder and CEO Michael Dell.
Dell said investors can swap the VMware Class V tracking shares for either 1.3665 in Dell common share or $109 in cash each, with a ceiling of $9 billion for the total transaction. The price gives investors a 29% premium to Dell's closing price of $84.58 on Friday. The cash portion of the payout will be financed by a special $11 billion dividend, paid by VMWare on a pro-rata basis.
"I am proud to lead this great company into its next chapter as we continue to evolve and grow to the benefit of our customers, partners, investors and team members," said CEO Dell. "Unprecedented data growth is fueling the digital era of IT, and we are uniquely positioned with our portfolio of technologies and services to enable the digital, IT, security and workforce transformations of our customers."
"Most importantly, I remain deeply committed to this company and working with our world-class team to build the long-term value of Dell Technologies and its businesses," said Dell, who owns 72% of the parent company.
Round Rock, Texas-based Dell shares rose 9.9% to $92.92, while VMware rose 7% to $157.20.