unfortunately, even if the VM CEO does not want the downsteam merger, he could be out voted by the board which has two Elliott's placements. CEO stated over 2 weeks ago he was not in favor of downstream merger. Why load up VM with more debt or dilute VM stock price with 50M more shares?
Either that or EMC will sell its stake or itself to another competitor but even then, buyout of VMware much more likely. 100-110 imo. Executives were leaving already for a reason imho.
This is why I went long calls. Thinking Monday will be a turnaround when the company answers questions at the corporate event about the merger. Definitely oversold here.
4343, I took your idea and sent email below to VMWare IR. I think everyone should sent something similar to VM IR to show shareholder resistance to buyout of EMC by VMWare. It is a bad deal.
I just don't see VMware doing a deal that vastly dilutes their shareholders especially when the company is owned 80% by EMC. VMWare buying out EMC makes zero business sense, because VM dilutes theirs share price by having to issue at least 50M more shares, or they have to assume more debt. Makes much more sense for EMC to buyout remaining percentage of VMW and then selling either VMware to another business, or sell the total business (EMC + VMWare) to another company. As a VMWare shareholder I am strongly against VMWare buying EMC. It is a totally stupid financial transaction and the CEO of VMWare knows this.
I just dont see them doing a deal that vastly dilutes their shareholders especially when the company is owned for 80% by EMC. Zero business sense. Makes much more sense for EMC to buyout remaining holdings of VMW and then selling it to another business. Look at the company stock, getting absolutely crushed here. I bought October calls as I believe a deal of some sorts is coming soon. Next week at the corporate day on Monday, I expect we will see some sort of statement about this whole process.
Chances are retail shareholders like us will know only after the sell-side analysts get the scoop first and issue their take on what VMW management presented to them.
@Software maker VMware (VMW), the subject of intense scrutiny Wednesday about a possible merger, or reverse merger, will host its annual meeting with the sell side next Monday, August 31st, during its five-day conference, VMworld, going on in San Francisco. (More on VMworld here.) Walter Pritchard, who follows the company for Citigroup, and who has a Buy rating on the stock, Wednesday afternoon wrote that the speculation about M&A is likely is to hover over the event next week.
squirrel1, I just sent your question to investor relations at VMWare, cause it is a good one. I used my email address for their reply. They are not going to answer a question on yahoo message board even if they have something monitoring it. Hopefully they will response.
Say something!!! They keep replaying the re-code article about VMW acquiring EMC.. Every time this happens, the stock gets creamed.. Either dispel the rumor or give us shareholders the reason why this would be considered..
VMW better not even think about buying EMC.. I can't even think of a worse strategy for VMW and it will make the stock performance even worse than it has been the last few years..
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Me either. They launched in 2014.
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Wny? I think the key reason is that as a standalone company, the new VMW would be able to pursue whatever path it chose to maximize return to shareholders. That might include a subsequent spinoff or sale of the EMC biz. Of course, if EMC bought VMW out, the new EMC could do that as well.
I have to admit this is completely unexpected and from what little I've read, downstream mergers are very rare. If I understand this all correctly, EMC shareholders will receive a stake in the new VMW and some cash. The question is what premium, if any, will VMW pay to EMC shareholders for the benefit of being its own master. It better be small to nothing, given the fact that EMC is a low-no growth biz, otherwise I vote NO to this deal.