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August 31, 2018
Richard J. Rothberg
General Counsel and Secretary
Dell Technologies Inc
One Dell Way
Round Rock, Texas 78682
Re: Dell Technologies Inc
Registration Statement on Form S-4
Filed August 6, 2018
File No. 333-226618
Dear Mr. Rothberg:
We have reviewed your registration statement and have the following
comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by amending your registration statement
and providing the
requested information. If you do not believe our comments apply to your facts
and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.
After reviewing any amendment to your registration statement and the
information you
provide in response to these comments, we may have additional comments.
Form S-4 filed August 6, 2018
Letter to Stockholders, page 1
1. Please clarify that if an election to receive cash consideration is not
made by submitting an
election form by the appropriate deadline, a Class V stockholder will
receive solely shares
of Class C Common Stock (other than cash received in lieu of a
fractional share of Class
C Common Stock).
Questions and Answers Regarding the Class V Transaction and the Special Meeting
Q: How will proration of a cash election be calculated under the merger
agreement?, page 3
2. Please provide additional context in your illustrative example as to how
much cash and
Richard J. Rothberg
FirstName LastNameRichard J. Rothberg
Dell Technologies Inc
Comapany NameDell Technologies Inc
August 31, 2018
August 31, 2018 Page 2
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FirstName LastName
how many Class C Common Stock shares will be issued if stockholders
elect to receive
more than $9 billion in cash. For example, clarify that the $10
billion example is based on
approximately 46% of the Class V shares electing to be cashed out
versus receiving Class
C Common Stock. Further, include an example that would illustrate the
amount of cash
and shares that the Class V stockholders would receive if 100% of the
holders elect to
receive cash.
Q: How many shares of Class C Common Stock are currently outstanding and
subject to
outstanding awards under stock option incentive plans?, page 5
3. Please clarify the number and value of the shares of Class C Common
Stock underlying
stock options that will vest under your golden parachute compensation
arrangements upon
the completion of the Class V transaction.
Q: For purposes of voting on the adoption of the merger agreement ..., page 12
4. In light of your affiliates being excluded from a separate class vote
of your Class V
stockholders, please clarify the percentage of the total Class V
Common Stock shares
outstanding that is needed to approve the separate class votes on
Proposals 1 and 2. Also,
identify which entities you consider affiliates that will be excluded
from the Class V
stockholder votes on Proposals 1 and 2. In particular, please clarify
whether the
stockholders of your Class V Common Stock disclosed on page 262 would
be considered
your affiliates and excluded from the separate class votes on
Proposals 1 and 2.
Summary
Evaluation of the Class V Transaction and Alternative Business Opportunities,
page 26
5. On pages 8, 26, 149, and 164, you reference receiving "feedback" from
more than 20
Class V stockholders representing nearly 40% of the outstanding shares
of Class V
Common Stock. You provide further discussion of Class V stockholder
feedback received
by Goldman Sachs, Evercore and Dell Technologies at various points in
time on pages
145 through 151. Please provide more details of this feedback,
including whether such
discussions involved Class V principal stockholders. Please summarize
the information
provided to these Class V stockholders and describe the feedback
provided. Further,
please clarify whether any of these investors indicated support or
their intention to vote
for a transaction similar to the Class V transaction ultimately
approved by the Special
Committee and Dell Technologies board of directors.
Ownership and Corporate Structure, page 27
6. Please revise your ownership and corporate structure illustration
before the Class V
transaction to clearly reflect the fact that Class V common stock
shareholders are common
stockholders of Dell Technologies. As you state on page 77, the DHI
Group and the Class
V Group are not separate legal entities and cannot own assets, and, as
a result holders of
Class V Common Stock do not have special rights related to specific
assets attributable to
Richard J. Rothberg
FirstName LastNameRichard J. Rothberg
Dell Technologies Inc
Comapany NameDell Technologies Inc
August 31, 2018
August 31, 2018 Page 3
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the Class V Group.
Management of Dell Technologies After the Class V Transaction, page 45
7. Please disclose that you intend to rely on the NYSE's controlled
company exemption and
that you have elected to not comply with certain corporate governance
requirements of the
NYSE, including the requirement to have a board composed of a majority
of independent
directors.
Risk Factors
The Company certificate designates a state court of the State of Delaware ...,
page 65
8. Please clarify whether the exclusive forum provision in your charter
is intended to apply
to claims under the federal securities laws.
Dell Technologies faces risks and challenges in connection with its goal ...,
page 68
9. You reference a challenging demand environment in Client Solutions,
noting a decline in:
worldwide revenues for desktop and laptop PCs; worldwide PC shipments
during calendar
year 2017; and shipment forecasts for PC products. In light of the
recent net revenue
growth in Client Solutions and your projected growth rates for your
Client Solutions
segment, please update this section and provide quantitative
disclosure where applicable.
Management of Dell Technologies After the Class V Transaction, page 111
10. Please expand the discussion of the Amended Sponsor Stockholder
Agreement here and in
the transaction summary section on page 46 to indicate the number of
board members that
the MD stockholders and the SLP stockholders are entitled to nominate.
Based on the
total voting power of the MD stockholders and the SLP stockholders as
of July 20, 2018,
it appears that they are entitled to nominate five of the six board
members. Please identify
the board members that are serving on the board pursuant to the
agreement.
Proposal 1 - Adoption of the Merger Agreement
Background of the Class V Transaction, page 135
11. On March 26 and 28, 2018, Goldman Sachs communicated to Evercore of
"significant
differences in the parties' views with respect to valuation." Please
describe these
differences, including quantifying these differences in valuation.
12. You disclose that updated Dell projections were provided to the Dell
Technologies board,
Goldman Sachs, the Special Committee, Evercore and Lazard on May 16,
2018. Please
clarify whether you received any feedback as to these updates and any
underlying
assumptions used in their calculation.
13. Please describe in more detail the feedback Lazard provided to Goldman
Sachs on March
25, 2018 regarding the valuation of the potential business combination
of Dell
Richard J. Rothberg
FirstName LastNameRichard J. Rothberg
Dell Technologies Inc
Comapany NameDell Technologies Inc
August 31, 2018
August 31, 2018 Page 4
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FirstName LastName
Technologies, and VMware, including Lazard's "different view on
certain assumptions
underlying the valuation analysis" and "assumptions regarding run-rate
synergies."
Opinion of Evercore Group, L.L.C., page 169
14. We note that Evercore, in its precedent tracking stock discount
analysis, applied a
discount range of 18.0% to 33.0% to the trading price of VMware common
stock based on
its calculation of the average discount of the Liberty Media SiriusXM
tracking stock.
Please advise us as to what consideration Evercore gave to the fact
that such discount
range substantially exceeded the 0-10% range that Evercore applied in
its Class V
Common Stock discount analysis in connection with the Dell-EMC merger
transaction in
2016, as publicly disclosed in the Form S-4 filed by Denali Holding
Inc. that went
effective on June 6, 2016.
15. Please revise this section generally to explain how Evercore
determined the perpetuity
growth rates and estimated ranges of weighted average cost of capital
used in its analyses.
Please do the same with respect to the Goldman Sachs analyses,
including by providing
greater detail regarding the various inputs and calculations
associated with application of
the Capital Asset Pricing Model.
16. With respect to the implied equity value reference range tables on
pages 175 and 176, we
note that the implied equity value of Dell Technologies in the Class V
transaction of $48.4
billion is at the high end of, if not entirely outside, the ranges
presented. Please revise the
disclosure to describe the consideration given to these results by
Evercore and to explain
what effect, if any, these results had on Evercore's opinion. Also,
explain how, if at all,
the Special Committee considered these results.
Certain Financial Projections, page 197
17. Please describe the analysis performed by the Special Committee's
advisor DISCERN
Analytics. Discuss the assumptions and the evaluation of Dell
Technologies' financial
forecasts, financial and operating data, and industry and market
research that DISCERN
used in the Dell projections sensitivity case. Please explain the
specific reasons
DISCERN provided the Special Committee as to why the firm lowered Dell
Technologies' financial projections. Tell us why you have not
disclosed DISCERN's role
in the summary section of the filing.
18. Please describe the nature of the supporting documentation described
on pages 198 and
199 that Dell Technologies management provided Goldman Sachs in June
2018.
Unaudited Pro Forma Condensed Consolidated Financial Statements, page 252
19. Please tell us and revise to disclose if material, how you considered
the change in vesting
conditions to the Class C options, and the conversion of Class V
deferred stock units and
Class V stock options issued to directors in your pro forma
presentation. At a minimum,
revise to disclose the pro forma Class C stock-based incentive awards
that are excluded
Richard J. Rothberg
FirstName LastNameRichard J. Rothberg
Dell Technologies Inc
Comapany NameDell Technologies Inc
August 31, 2018
August 31, 2018 Page 5
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FirstName LastName
from your earnings per share calculations because the effect would be
anti-dilutive.
Security Ownership of Certain Beneficial Owners and Management, page 261
20. Please revise your beneficial ownership table to clarify the voting
power for each member
of management and your principal stockholders.
21. Please clarify in Notes (2) and (12) to your beneficial ownership
table whether the
33,449,504 shares of Dell Technologies Class A Common Stock
beneficially owned by
MSD Partners are excluded from the 348,677,582 shares of Class A
Common Stock
beneficially owned by Michael S. Dell.
Comparison of Rights of Class V Stockholders and Class C Stockholders, page 289
22. On page 290, you state that the Class C Common Stock after the Class V
Transaction will
have "[n]o special voting rights, except as provided by Delaware law."
Please clarify the
circumstances under which a separate class voting right will be
provided under Delaware
law, such as if your certificate were to be amended to adversely
affect the powers,
preferences or rights of Class C stockholders.
23. We note that there are 22,175,919 shares of Class C Common Stock
currently outstanding
as of July 20, 2018, and a portion is subject to a registration rights
agreement. Please
clarify any material differences between the rights and privileges
associated with existing
Class C Common Stock and the rights and privileges associated with the
Class C
Common Stock that is to be issued through the offering to Class V
stockholders. Further,
please clarify whether existing Class C stockholders are entitled to
separate class voting
rights for Proposals 1 and 2 under the Delaware General Corporation
Law.
General
24. We note that the Class V Common Stock is listed on the NYSE and
registered under
Section 12(b) of the Exchange Act. We further note that the Class V
transaction will
result in the delisting of the Class V Common Stock. Please provide us
with your analysis
of the applicability of Exchange Act Rule 13e-3 to the Class V
transaction, including
reliance on any of the exceptions to the rule's applicability.
25. Please provide us supplementally with copies of all board books and
similar materials
prepared by the financial advisors and shared with the Special
Committee or board of
directors. Please also provide us supplementally with a copy of the
November 3, 2017
third-party valuation report referred to on page 138.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
Richard J. Rothberg
Dell Technologies Inc
August 31, 2018
Page 6
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Rebekah Lindsey, Staff Accountant, at (202) 551-3303 or
Kathleen
Collins, Accounting Branch Chief, at (202) 551-3499 if you have questions
regarding comments
on the financial statements and related matters. Please contact Edwin Kim,
Attorney-Advisor, at
(202) 551-3297 or Jan Woo, Legal Branch Chief, at (202) 551- 3453 with any
other questions. If
you require further assistance, you may contact Barbara C. Jacobs, Assistant
Director, at (202)
551-3735.
Sincerely,
FirstName LastNameRichard J. Rothberg Division of
Corporation Finance
Office of
Information Technologies
Comapany NameDell Technologies Inc
and Services
August 31, 2018 Page 6
cc: Hui Lin, Esq.
FirstName LastName