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Michael Dell’s wealth has risen by $5 billion in the last year with much of it attached to Dell Technologies (NYSE:DELL) return to the public market.
2013 – Dell Goes Private
In 2013 after years of underwhelming performance, Dell Computers decided a leveraged buyout was the best decision for the company, removing them from the public’s eye and giving Dell the ability to focus on long term strategy instead of short term returns to shareholders. The process was heavily criticized by Carl Icahn claiming that Dell’s board simply “didn’t give a damn”, and after failed litigation, Dell went private for $25 billion with Icahn claiming Michael Dell was getting it for far less than it’s value.
Michael Dell managed to stay out of the public eye for the next 5 years, with the exception of the acquisition of EMC for a record $67 billion. During this period Dell became Dell Technologies and expanded their data center presence while lowering losses on the PC side causing the value of the company to rise. The company was private so there was very little information on their worth, however, Dell Technologies went public last month at a value of $46 per share. The stock has fallen to $42 since with a market cap of just over $30 billion. What is interesting is that Dell Technologies owns 80% of VMware Inc. (NYSE:VMW), which is valued at $60 billion, but Dell Technologies' high debt ratio seems to be holding the stock back from realizing its’ true value. It should be of note that Paul Coster of JPMorgan issued a target of $60 for the stock citing that as they pay down debt the value will become apparent, he also noted how well positioned Dell is with “one of the largest, most comprehensive, most integrated product and service companies in the IT space”.
Bloomberg Billionaires Index
When Dell Technologies returned to public markets Icahn again thought that he got a favorable deal, and based on company valuation and price paid to DVMT stockholders it seems to ring true. Michael Dell’s wealth rose from $20 billion to $26 billion during Dell Technologies return to the public market, however, some of that value would be accounted for by untracked increases due to Dell Technologies being private. Carl Icahn currently is estimated to have a value of $19 billion according to the Bloomberg list.
Once the first earnings call for Dell Technologies is released we will have a much better idea of their actual value, until then we can expect high volatility among their shares. We’ll keep you posted as soon as more news is released by the company.