VMware Rejects ‘Unsolicited’ Stock Offer By Private Equity Firm

VMware is telling shareholders to reject an ‘unsolicited mini-tender’ offer by private equity firm TRC Capital because of concerns regrading TRC’s offer.

Newly independent VMware is recommending shareholders reject an “unsolicited mini-tender” offer by private equity firm TRC Capital to purchase up to 1 million shares of its Class A common stock due to several concerns regarding the firm’s offer.

“ VMware is not affiliated with TRC, its mini-tender offer or the mini-tender offer documentation and does not endorse TRC’s unsolicited mini-tender offer,” said VMware in a statement. “TRC has included in the terms of its offer a condition that the price of VMware’s common stock must not decrease. Based on the terms of the offer, unless TRC decides to waive this condition, VMware stockholders who tender their shares in the offer would receive a below-market price for their shares through the tender offer.”

Paris, France-based TRC is offering to purchase up to 1 million shares of VMware stock at a price of $118.50 per share in cash. TRC’s price was 4 percent less than the $123.74 closing share price of VMware’s common stock on Jan. 21, 2022, which was the last trading day before TRC commenced its mini-tender offer.

[Related: VMware CEO: Why Tanzu ‘Wins’ Over IBM’s Red Hat OpenShift]

The U.S. Securities and Exchange Commission has cautioned investors about mini-tender offers, noting that some bidders make mini-tender offers at below-market prices, hoping that “they will catch investors off guard if the investors do not compare the offer price to the current market price,” VMware said in a release.

If all of the shares TRC is seeking were acquired, the private equity firm’s ownership would represent 0.24 percent of VMware’s stock.

VMware is recommending that stockholders do not tender their shares in response to the TRC offer. Those VMware stockholders who have already tendered TRC’s shares can withdraw them at any time prior to Feb. 23, 2022, which VMware said is the expiration date in the offer.

As of Friday morning, VMware’s stock is at $124.76 per share, up more than 6 percent over the past 30 days.

The Palo Alto, Calif.-based virtualization and software superstar recently became an independent company following its spin-off from Dell Technologies. On Nov. 1, Dell sold its 81 percent majority stake in VMware to Dell Technologies shareholders, the largest of which was Dell founder and CEO Michael Dell.

In an interview with CRN this week, VMware CEO Raghu Raghuram said he was bullish about his company’s future as an independent entity for the first time since 2004.

“We are enjoying conversations at a much more strategic level with companies that we had previously not had the opportunity to do that [with]. How and where that materializes into products that benefit the customers and the channel is down the road. But we are already seeing that,” said Raghuram. “Also, that opens up the ability for engineers to innovate with other partners in ways that we have not done so before.”

VMware currently has a market cap of $52.44 billion.

For more on VMware, read The Top 10 Biggest VMware Stories To Watch In 2022.