Author Topic: VMW - VMWare  (Read 7057 times)


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Re: VMW - VMWare
« Reply #20 on: September 13, 2019, 10:00:21 AM »
Has anyone looked at arbitraging the DELL discount to VMW?

I don't think DELL is interested in selling VMW, they sell a lot of hardware to VMW customers. VMW is DELL's "get out of jail" card (a growing cash cow). Though they probably can't take it private as the VMW people like their VMW stock (options). 

I can see certain issues with a short VMW/long DELL position:

1) The odd special dividend paid out of VMW cash flow that will support its market price and the discount (but DELL can use that cash to pay down debt);
2) The consistent issuance of VMW stock (through option grants) diluting DELL's ownership over time and therefore reinforcing the discount; and
3) DELL's inferior balance sheet and, on a standalone basis, its operating metrics.

I wonder if that is worth $15 per share.