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Breaking News from CNBC’s David Faber: Dell’s EMC Offer to Include Cash & Tracking Stock of VMW – Sources

WHEN: Today, Friday, October 9th

WHERE: CNBC's "Power Lunch"

Following is the unofficial transcript of breaking news from CNBC's David Faber.

All references must be sourced to CNBC.

DAVID FABER: OF COURSE, WE'VE BEEN FOLLOWING THE POTENTIAL ACQUISITION OF EMC BY DELL AND I DID WANT TO UPDATE OUR VIEWERS ON SOME NEW INFORMATION THAT I HAVE RECEIVED. NAMELY, THE CONSIDERATION THAT DELL WOULD PAY FOR EMC. NOW, THEY CONTINUE TO NEGOTIATE AT THIS POINT, OF COURSE, AND IN FACT DELL IS VERY MUCH INVOLVED IN TRYING TO GET THE FINANCING FOR SAID DEAL TOGETHER IN THE CREDIT MARKETS. BUT WHAT WE CAN EXPECT TO SEE SHOULD THE DEAL BE ANNOUNCED IN THE NEAR TERM WOULD BE A PAYMENT OF CASH TO EMC SHAREHOLDERS AND A TRACKING STOCK OF VMWARE. THAT'S AN IMPORTANT COMPONENT OF THIS POTENTIAL DEAL. 81% OF VMWARE IS OWNED BY EMC AND SOURCES FAMILIAR WITH THE SITUATION NOW INDICATE THAT DELL WOULD PAY BOTH CASH AND A TRACKING STOCK, A STOCK THAT WOULD TRACK THE PERFORMANCE OF THE PUBLIC EQUITY OF VMWARE, 90% OF WHICH TRADES, BUT WHICH WOULD BE CONTROLLED BY DELL IN ANY DEAL. AND SO THAT, TOGETHER WITH CASH, I AM TOLD WOULD ADD UP TO WHAT IS BELIEVED TO BE AT LEAST A DEAL WORTH $30 A SHARE OR MORE FOR EMC. I HAVE NOT BEEN ABLE TO PINPOINT THE EXACT PRICE AND OF COURSE, IT WILL MOVE AROUND TO A CERTAIN EXTENT BASED ON THE VALUE OF VMWARE, WHICH AS I SAID HAS 19% THAT TRADES PUBLICLY. THE OTHER 81% CURRENTLY OWNED BY EMC. BUT MOST IMPORTANTLY, VMWARE WOULD BE CONTROLLED BY DELL AND IT WOULD POTENTIALLY BENEFIT FROM BEING PART OF THE LARGER DELL/EMC AS WELL AND A PRIVATE COMPANY. AS I SAID, DELL IS CURRENTLY IN THE MIDST OF TRYING TO PUT TOGETHER AN ENORMOUS FINANCING PACKAGE FOR THIS DEAL. AS I REPORTED YESTERDAY, THAT WOULD INCLUDE BOTH HIGH YIELD AND POTENTIALLY AN INVESTMENT GRADE SECURED OFFERING OF INVESTMENT GRADE BONDS AS WELL. MANY BANKS INVOLVED IN THAT EFFORT, TYLER. THEY ARE GOING TO BE WORKING THROUGH THE WEEKEND, AND WE MAY SEE A DEAL AS SOON AS EARLY NEXT WEEK. PERHAPS NOT MONDAY, BUT PERHAPS IN THAT TIME FRAME OF LET'S CALL IT EARLY NEXT WEEK UNDER WHICH AGAIN, DELL WOULD BUY EMC AND PAY CASH AND A TRACKING STOCK OF VMWARE TO THOSE SHAREHOLDERS WHO WOULD THEN OBVIOUSLY AT SOME POINT HAVE TO VOTE ON IT. IT WOULD TAKE SOME TIME TO GET THAT DEAL APPROVED, BUT THAT'S WHERE WE STAND RIGHT NOW.

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