Michael Dell is going to have to sell VMware on a deal to merge. Fortunately for him, he may have about $9 billion of found money to play with.
And getting the deal done may come down to how much of that he immediately transfers to VMware shareholders.
The "found money" would come from Dell's tracking stock, DVMT, which trades at about a 40 percent discount to VMware for a variety of reasons, including having no voting rights. The tracking stock's purpose is to mimic the performance of VMware within Dell, the closely held technology company owned by Michael Dell and private equity firm Silver Lake.
If DVMT is consolidated within Dell and VMware, the tracking discount will disappear, as all shareholders will own the same publicly traded stock. There are about 200 million outstanding shares of DVMT, each of which trades around $74. VMware shares trade at about $120. Erasing a discount would be the equivalent of more than $9 billion in new wealth.