Dell Technologies Inc. · NYSE:DELL
Dell Technologies — Merger or Acquisition (November 2018)
36 slides from Dell Technologies's merger presentation, Nov 20, 2018
Slide 1: Dell Technologies Special Committee Presentation to ISS
Filed by Dell Technologies Inc. Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-6 of the Securities Exchange Act of 1934 Subject Company: Dell Technologies Inc. (Commission File No. 001-37867) [Either insert client logo Class V / Dell Technologies Exchange
Slide 2: No Offer or Solicitation
Excel Accent chart colors/ colors: 16 16 124 38 185 185 No Offer or Solicitation This communication does not constitute an offer to sell or a solicitation of an offer to sell or a solicitation of an offer to buy any securities or a Note, this disclaimer page 114 R-235 solicitation of any vote or app
Slide 3: Forward-Looking Statements
Excel Accent chart colors/ colors: 16 16 124 38 185 185 Forward-Looking Statements This communication contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Note, this disclaimer page 114 R-235 Securities Exchange Act of 1934. The
Slide 4: Today's Presenters – Members of the Special Committee
Excel Accent chart colors/ colors: Today’s Presenters – Members of the Special Committee of Dell Technologies Inc. 16 16 124 38 185 185 The Special Committee of Dell Technologies Inc. is comprised of two members of the Board of Directors of Dell Technologies Inc., David Dorman and Bill Green 114 R-2
Slide 5: Executive Summary
Excel Accent chart colors/ colors: Executive Summary 16 16 124 38 185 185 The Special Committee Conducted Thorough Deliberations and Extensive Negotiations Over The Course 114 R-235 of Nine Months 174 G-133 67 B-33 n The Special Committee of Dell Technologies Inc. (the “Special Committee”) considere
Slide 6: Table of Contents
Excel Accent chart colors/ colors: Table of Contents 16 16 124 38 185 185 Note, the TOC page can be 114 generated using FactSet. R-235 174 G-133 Section 67 B-33 147 150 Transaction Overview I 149 56 152 144 247 R-250 182 Process and Governance II G-202 23 B-0 110 R-191 56 G-191 Evercore Valuation An
Slide 7: Transaction Overview
To update section number manually, click in the text box, go to Numbering: I. Transaction Overview To update section number manually, click in the text box, go to Numbering: I. Transaction Overview
Slide 8: Transaction Overview
Excel Accent chart colors/ colors: Transaction Overview 16 16 124 38 185 185 n Dell will form a wholly owned Delaware merger subsidiary that will merge with and into Dell, with Dell continuing as the surviving 114 R-235 Transaction corporation in the merger 174 G-133 Structure 67 B-33 n Class V shar
Slide 9: Transaction Overview (Cont'd)
Excel Accent chart colors/ colors: Transaction Overview (Cont’d) 16 16 124 38 185 185 n Support and lock-up agreements previously entered into by Michael Dell and Silver Lake Partners Support 114 R-235 174 G-133 Agreement n Voting and support agreements entered into by Dodge & Cox, Elliott, Canyon a
Slide 10: Transaction Metrics and Key Consideration Metrics
Excel Accent chart colors/ colors: ($ in billions, except per share values) Transaction Metrics 16 16 124 38 185 185 1 Key Consideration Metrics 114 R-235 174 G-133 Class V Price During Averaging Period $120.00 $104.55 67 B-33 Class C / Class V Exchange Ratio 1.5043 1.8130 147 150 Stock Consideratio
Slide 11: Overview of "Top-Up" Structure
Excel Accent chart colors/ colors: Overview of “Top-Up” Structure 16 16 124 38 185 185 114 R-235 The “top-up” provides for an increase in the exchange ratio based on two factors: 174 G-133 67 B-33 1) The volume weighted average price of Class V over the Averaging Period 147 150 149 56 152 144 2) The
Slide 12: "Top-Up": Equity Value, Total Consideration, and Effective Offer Price
Excel Accent chart colors/ colors: “Top-Up”: Equity Value, Total Consideration, and Effective Offer Price 16 16 124 38 ($ in billions, except per share values) 185 185 1 Dell Implied Equity Value 114 R-235 Class V Price Per Share During Averaging Period 174 G-133 $104.55 $106.00 $109.00 $112.00 $114
Slide 13: "Top-Up": Premia and Discounts at $48.3bn Dell Equity Value
Excel Accent chart colors/ colors: “Top-Up”: Premia and Discounts at $48.3bn Dell Equity Value 16 16 124 38 185 185 Assuming Dell equity value of $48.3bn, Class V shareholders will receive at least $120 per share, implying a premium of 42% to 54% to the pre-announcement price (6/29/18) of Class V an
Slide 14: "Top-Up": Class V Pro Forma Ownership
Excel Accent chart colors/ colors: ($ in billions, except per share values) “Top-Up”: Class V Pro Forma Ownership 16 16 124 38 185 185 The exchange ratio also impacts the ownership of Class V shareholders, with shareholders receiving increased ownership should Class V trade below $120 per share duri
Slide 15: Transaction Structure
Excel Accent chart colors/ colors: Transaction Structure 16 16 124 38 185 185 Exchange of Class V Shares into Dell Class C Shares 114 R-235 174 n Pro forma Dell Class C shares would be publicly listed and will represent an economic interest in Dell G-133 67 B-33 147 150 n Former Class V shareholders
Slide 16: Process and Governance
To update section number manually, click in the text box, go to Numbering: II. Process and Governance To update section number manually, click in the text box, go to Numbering: II. Process and Governance
Slide 17: Dell Special Committee Process
Excel Accent chart colors/ colors: Dell Special Committee Process 16 16 124 38 The Special Committee Conducted Thorough Deliberations Over The Course of Many Months 185 185 § The Special Committee is composed of independent and disinterested directors who were fully empowered to consider the Class 1
Slide 18: Analyzed and Considered Numerous Strategic Alternatives for Maximizing Value
Excel Accent chart colors/ colors: Analyzed and Considered Numerous Strategic Alternatives for Maximizing Value 16 16 124 38 185 185 Description Treatment of Class V Class V Shareholder Approval 114 R-235 174 G-133 § 3-way deal involving Dell, VMware § Class V converts into combined Dell + § Subject
Slide 19: Comprehensive Evaluation and Extensive Negotiations Over Nine Months
Excel Accent chart colors/ colors: Comprehensive Evaluation and Extensive Negotiations Over Nine Months 16 16 124 38 185 185 114 September 7, 2016: Following the merger with EMC, Dell issued Class V Common Stock to EMC shareholders to track the performance of Dell’s R-235 174 G-133 economic interest
Slide 20: Comprehensive Evaluation and Extensive Negotiations (Cont'd)
Excel Accent chart colors/ colors: Comprehensive Evaluation and Extensive Negotiations Over Nine Months (Cont’d) 16 16 124 38 185 185 114 R-235 174 G-133 67 B-33 May 22 June 4 July 2 Dell presented a framework for After receiving Dell’s revised projections, the SC and Dell announced approval 147 150
Slide 21: Comprehensive Evaluation and Extensive Negotiations (Cont'd)
Excel Accent chart colors/ colors: Comprehensive Evaluation and Extensive Negotiations Over Nine Months (Cont’d) 16 16 124 38 185 185 114 R-235 174 G-133 November 2 November 7 - 14 November 9 67 B-33 Dell and SLP authorized Dell negotiated with Elliott, Dell management conducted a 147 150 Dodge & Co
Slide 22: Improved Transaction Terms Over the Course of Extensive Negotiations
Excel Accent chart colors/ colors: Improved Transaction Terms Over the Course of Extensive Negotiations 16 16 124 38 185 185 Date of Proposal Dell Equity Value Class V Value / Share Class V Cash Consideration Governance 114 R-235 Maintain existing Dell $50bn $100.00 / share $0bn 174 April 2018 G-133
Slide 23: Progression of Proposal Leading to Substantially Improved Terms
Excel Accent chart colors/ colors: Progression of Proposal Leading to Substantially Improved Terms 16 16 124 38 ($ in billions, except per share values) 185 185 The Special Committee engaged in extensive negotiations with Dell 114 Dell Proposed SC Counter Revised Transaction R-235 174 G-133 Framewor
Slide 24: Evercore Valuation Analysis
To update section number manually, click in the text box, go to Numbering: III. Evercore Valuation Analysis To update section number manually, click in the text box, go to Numbering: III. Evercore Valuation Analysis
Slide 25: Class V vs. VMware Stock Price Performance
Excel Accent chart colors/ colors: Class V vs. VMware Stock Price Performance ($ / share) 16 16 124 38 Since inception, the Class V tracking stock has consistently traded at a discount to VMware, but Class V 185 185 Average has realized an outsized return as compared to other tracking stocks 114 R-2
Slide 26: Dell Excl. VMware Revenue Growth Rate vs. Peers
Excel Accent chart colors/ colors: 1 Dell Excl. VMware Revenue Growth Rate vs. Peers 16 16 124 38 185 185 Dell’s revenue growth rate has and is expected to significantly outpace peers 114 R-235 174 G-133 67 B-33 YoY Revenue Growth (CY2016A – CY2020E) 147 150 149 56 CY17-CY18 CY18-CY19 CY19-CY20 152
Slide 27: Dell Implied Valuation Multiples vs. Peers
Excel Accent chart colors/ colors: ($ in billions, except per share values) Dell Implied Valuation Multiples vs. Peers 16 16 124 38 185 185 The implied valuation for Dell compares favorably to that of its primarily lower growth peers 114 R-235 174 G-133 EV / EBITDA CY18E EV / EBITDA CY19E 67 B-33 Me
Slide 28: Dell Outperformed Expectations During the Process and Since Announcement
Excel Accent chart colors/ colors: Dell Outperformed Expectations During the Process and Since Announcement 16 16 124 38 185 185 Dell has substantially outperformed credit research expectations¹ across all business units in the last three quarters 114 R-235 174 G-133 67 B-33 Revenue Growth Performan
Slide 29: Dell's Valuation Arguments Strengthened Through the Process
Excel Accent chart colors/ colors: Dell’s Valuation Arguments Strengthened Through the Process 16 16 124 38 185 185 Valuation and Business Performance 114 R-235 174 G-133 § Management’s expectations for FY20E Core EBIT increased by ~$0.5bn and expectations for net income 67 B-33 Dell Core 1 increase
Slide 30: Sensitivity Case Background and Summary
Excel Accent chart colors/ colors: Sensitivity Case Background and Summary 16 16 124 38 185 185 DISCERN Analytics was hired by the Special Committee to do an independent analysis of Dell’s business assumptions and forecasts 114 R-235 174 G-133 n The Special Committee hired DISCERN Analytics to perfo
Slide 31: Overview of Dell Valuation Analysis
Excel Accent chart colors/ colors: ($ in billions) Overview of Dell Valuation Analysis 16 16 124 38 185 185 Dell Management Case Sensitivity Case 114 R-235 Valuation Methodology Key Assumptions Valuation Range 174 G-133 67 B-33 Implied Equity § DCFs based on projections from FY19 to FY23 for Dell an
Slide 32: Overview of Class V Valuation Analysis
Excel Accent chart colors/ colors: Overview of Class V Valuation Analysis 16 16 124 38 185 185 With respect to the value of Class V, Evercore considered the discount at which other tracking stocks trade, the premia at which other tracking stocks converted and the historical trading range of Class V
Slide 33: Potential Recapture of Portion of Class V Discount Due to Class V Ownership
Excel Accent chart colors/ Potential Recapture of Portion of Class V Discount Due to Class V Ownership in colors: Pro Forma Dell ($ in billions, except per share values) 16 16 124 38 185 185 Class V would share in the Class V discount that Dell receives due to Class V’s ownership in the pro forma en
Slide 34: Appendix
To update section number manually, click in the text box, go to Numbering: Appendix To update section number manually, click in the text box, go to Numbering: Appendix
Slide 35: Dave Dorman Bio
Excel Accent chart colors/ colors: Dave Dorman Bio 16 16 124 38 185 185 David Dorman, Director & Member of the Special Committee of Dell Technologies Inc. 114 R-235 Mr. Dorman has been a member of the board of directors of Dell since September 2016 174 G-133 67 B-33 Mr. Dorman has extensive relevant
Slide 36: Bill Green Bio
Excel Accent chart colors/ colors: Bill Green Bio 16 16 124 38 185 185 Bill Green, Director & Member of the Special Committee of Dell Technologies Inc. 114 R-235 Mr. Green has been a member of the board of directors of Dell since September 2016 174 G-133 67 B-33 Mr. Green has extensive relevant expe
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