EMC (EMC), Dell Deal Clears China Regulatory Hurdle; VMWare (VMW) Seen Trading at Discount - Wells Fargo
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Wells Fargo affirms EMC Corp. (NYSE: EMC) at Market Perform following news that the company's marger with Dell will close on September 7th.
The firm commented today:
EMC announced the transaction with Dell has received approval from MOFCOM (China's Ministry of Commerce) and with all the regulatory approvals received the two companies expect to close their merger next Wednesday (Sept. 7th). The joint press release also noted that the new VMWare (NYSE: VMW) tracking stock will start trading on September 7th with 'DVMT'. At closing, EMC shareholders will receive $24.05 in cash per share plus a VMW tracking stock of 0.111x per EMC share. Based on VMW intraday stock price of $74.46 and assuming a 30% discount to the tracking stock, we believe the deal value is $29.85, which represents 3.2% premium to EMC intraday stock price of $28.92. Conversely, based on the current share prices of EMC and VMW, the market appears to be valuing the tracking stock at about 40% discount.
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