424B3 1 d658927d424b3.htm 424B3 424B3
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Filed pursuant to Rule 424(b)(3)
Registration No. 333-226618

November 26, 2018

 

LOGO

AMENDED CLASS V TRANSACTION PROPOSAL—YOUR VOTE IS VERY IMPORTANT

 

 

Dear fellow stockholders:

On or about October 23, 2018, we mailed you a proxy statement/prospectus dated October 19, 2018 (the “proxy statement/prospectus”) relating to a special meeting of the stockholders of Dell Technologies Inc. (“Dell Technologies,” the “Company,” “we,” “our” or “us”), to be held on December 11, 2018, at 8:00 a.m., Central Time, at the Dell Round Rock Campus, 501 Dell Way (Building 2-East), Round Rock, Texas 78682. The special meeting has been called for the purpose of considering and voting upon a number of matters relating to a proposed transaction (the “Class V transaction”), which would be implemented pursuant to an Agreement and Plan of Merger, dated as of July 1, 2018 (the “merger agreement”), between the Company and Teton Merger Sub Inc., a wholly owned subsidiary of the Company (“Merger Sub”).

I am pleased to announce that, on November 14, 2018, the Company and Merger Sub entered into Amendment No. 1 to the Agreement and Plan of Merger (the “merger agreement amendment” and, together with the merger agreement, as it may be further amended from time to time, the “amended merger agreement”). The merger agreement amendment, among other things, (i) increases the maximum amount of cash consideration payable to the holders of our Class V Common Stock in the Class V transaction from $9 billion to $14 billion, (ii) increases the per share cash consideration payable to the holders of the Class V Common Stock electing to receive cash consideration from $109.00, without interest, to $120.00, without interest, and (iii) increases the ratio at which each share of Class V Common Stock may be exchanged from 1.3665 shares of Class C Common Stock to at least 1.5043 shares of Class C Common Stock. Under the amended merger agreement, at the effective time of the merger, each share of our Class V Common Stock will be converted into the right to receive, at the election of the holder of such share, either (1) such number of shares of our Class C Common Stock as determined by the application of the exchange ratio, which will be between 1.5043 and 1.8130 (as described in the accompanying supplement to the proxy statement/prospectus), or (2) $120.00 in cash, without interest, subject to a cap of $14 billion on the aggregate amount of cash consideration.

In addition, the merger agreement amendment provides for certain corporate governance changes, including changes to the Company’s amended and restated certificate of incorporation (the “amended and restated Company certificate”) to provide for the ability of holders of Class C Common Stock, voting separately as a series, to elect one director at each annual meeting of stockholders of the Company, beginning with the second annual meeting of stockholders of the Company following the completion of the Class V transaction. Further, pursuant to the merger agreement amendment, by no later than June 30, 2019, (i) the Company’s board of directors will appoint to the board a fourth independent director after consultation with holders of Class C Common Stock and (ii) the Company will establish a nominating and corporate governance committee of the board of directors that, among its other responsibilities, will select or recommend to the board of directors a director nominee for election or re-election by the holders of Class C Common Stock, voting separately as a series.

If holders of Class V Common Stock elect in the aggregate to receive more than $14 billion in cash, the cash elections will be subject to proration as described in the accompanying supplement. The Company expects to issue between approximately 299,892,120 shares of Class C Common Stock (if all holders of Class V Common Stock elect to receive shares of Class C Common Stock) and approximately 124,390,453 shares of Class C Common Stock (if the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in


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cash and the exchange ratio is 1.5043). With respect to any share consideration received by holders, holders will receive not less than 1.5043 shares of Class C Common Stock for each share of Class V Common Stock that is exchanged pursuant to the Class V transaction. The Class C Common Stock will be entitled to one vote per share with respect to matters to be voted upon by the Company’s stockholders and will represent an interest in Dell Technologies’ entire business and, unlike the Class V Common Stock, will not track the performance of any distinct assets or business.

The Company has applied to list the Class C Common Stock on the New York Stock Exchange (the “NYSE”) under the symbol “DELL.” If the listing is approved, the shares of Class C Common Stock will begin trading following the completion of the Class V transaction. If the Class V transaction is completed, there will no longer be any outstanding shares of Class V Common Stock, which is currently listed on the NYSE under the ticker symbol “DVMT.”

The completion of the Class V transaction is contingent on, among other things, the holders of a majority of the outstanding shares of our Class V Common Stock (excluding shares held by affiliates of the Company) approving the adoption of the amended merger agreement and the amended and restated Company certificate that is described in the accompanying supplement. The accompanying supplement includes copies of the merger agreement amendment and the form of the amended and restated Company certificate as Annex S-A and Annex S-B thereto, respectively, and the proxy statement/prospectus includes a copy of the merger agreement as Annex A thereto.

Our board of directors formed a Special Committee comprised entirely of independent and disinterested directors to evaluate the Class V transaction and other potential alternatives solely on behalf of, and solely in the interests of, the holders of Class V Common Stock. The Special Committee has unanimously determined that the amended merger agreement and the Class V transaction are advisable and in the best interests of the holders of the Class V Common Stock. The Special Committee unanimously recommends that all holders of the Class V Common Stock entitled to vote thereon vote “FOR” the adoption of the amended merger agreement and “FOR” the adoption of the amended and restated Company certificate. Our board of directors also has unanimously determined that the amended merger agreement and the Class V transaction are advisable and in the best interests of the Company and all of its stockholders. The board of directors unanimously recommends that all stockholders vote “FOR” the adoption of the amended merger agreement and “FOR” the adoption of the amended and restated Company certificate.

The accompanying supplement describes the amended merger agreement and the Class V transaction. We urge you to read, carefully and in their entirety, the accompanying supplement and its annexes, including the merger agreement amendment and the form of the amended and restated Company certificate attached as Annex S-A and Annex S-B thereto, respectively, and, if you have not done so already, the proxy statement/prospectus, which was previously provided to you, including its annexes and the documents referred to or incorporated by reference therein. In particular, you should carefully consider the matters discussed under “Risk Factors,” which begins on page 60 of the proxy statement/prospectus, and “Update to Risk Factors,” which begins on page S-33 of the accompanying supplement and any documents incorporated by reference into the proxy statement/prospectus and the accompanying supplement.

Regardless of the number of shares of common stock you own, your vote is important. We cannot complete the Class V transaction without the approval of the adoption of the amended merger agreement and the amended and restated Company certificate by our stockholders, including the holders of our Class V Common Stock. Whether or not you plan to attend the special meeting, if you have not already done so, we urge you to submit a proxy as promptly as possible to authorize in advance of the special meeting the voting of your shares by using one of the methods described in the proxy statement/prospectus. If you previously submitted a proxy for the special meeting of stockholders, which proxy has not subsequently been revoked, and you intend such proxy to be voted at the special meeting in the manner specified, you do not need to do anything further. If you previously submitted a proxy card and wish to revoke your proxy or change your voting instructions, we urge you to submit a later dated proxy card to have your shares voted as instructed on the proxy card mailed to you by Dell Technologies, which will revoke any earlier dated proxy card that you


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submitted. If you fail to vote or abstain from voting on the adoption of the amended merger agreement or the amended and restated Company certificate, the effect will be the same as a vote against the Class V transaction.

Additionally, in connection with the merger agreement amendment, we have updated the election form previously sent to you. If you have not already submitted an election form or wish to change your election, we urge you to complete the updated election form when you receive it and submit it so that your election form is received by our exchange agent by 5:30 p.m., New York City time, on the eighth trading day following the date on which the Company issues a public announcement that the requisite stockholder approvals for the Class V transaction have been obtained. If you have previously submitted an election form, and you do not wish to change your election, you do not need to do anything further because the increase in the share consideration and the cash consideration pursuant to the merger agreement amendment will automatically apply to your election choices indicated in the prior election form. If you fail to submit a properly completed election form by this deadline or fail to properly elect which form of consideration to receive, you will be deemed to have made a share election and will receive solely shares of Class C Common Stock (other than cash received in lieu of a fractional share of Class C Common Stock).

We hope to see you at the special meeting and look forward to the successful completion of the Class V transaction.

Sincerely,

Michael S. Dell

Chairman of the Board and Chief Executive Officer

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the transactions described in the accompanying supplement or the proxy statement/prospectus or determined that the accompanying supplement or the proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying supplement is dated November 26, 2018.


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ADDITIONAL INFORMATION

The proxy statement/prospectus, including the accompanying supplement, incorporates important business, financial and other information about the Company from documents that are not included in the proxy statement/prospectus or the accompanying supplement. Stockholders of Dell Technologies, including any beneficial owner, may obtain copies of any of the documents incorporated by reference into the proxy statement/prospectus and the accompanying supplement, excluding any exhibit to those documents unless the exhibit is specifically incorporated by reference into those documents, at no cost, by written or oral request directed to:

Dell Technologies Inc.

One Dell Way

Round Rock, Texas 78682

Attention: Investor Relations

Telephone: (512) 728-7800

If you have questions about the Class V transaction, the accompanying supplement or the proxy statement/prospectus, would like additional copies of the proxy statement/prospectus or the accompanying supplement or need to obtain proxy cards or other information related to the proxy solicitation, please contact Innisfree M&A Incorporated toll-free at (877) 717-3936 (persons in the United States and Canada), +1 (412) 232-3651 (persons outside the United States and Canada) or (212) 750-5833 (collect) (banks, brokers and other financial institutions). You will not be charged for any of these documents that you request.

If you would like to request documents incorporated by reference into the proxy statement/prospectus or the accompanying supplement, please do so by no later than December 4, 2018, which is five business days before the date of the special meeting of stockholders.

See “Where You Can Find More Information” for additional information, including how you can view the incorporated documents via the internet.

Neither the proxy statement/prospectus nor the accompanying supplement constitutes an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction, to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.


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NOTICE TO STOCKHOLDERS

DELL TECHNOLOGIES INC.

One Dell Way

Round Rock, Texas 78682

 

 

SUPPLEMENT DATED NOVEMBER 26, 2018

(to the Proxy Statement/Prospectus dated October 19, 2018)

AMENDED CLASS V TRANSACTION PROPOSAL

To the Stockholders of Dell Technologies Inc.:

On or about October 23, 2018, we mailed you a proxy statement/prospectus, dated October 19, 2018, which is referred to herein as the proxy statement/prospectus, relating to a special meeting of the stockholders of Dell Technologies, to be held on December 11, 2018, at 8:00 a.m. Central Time, at the Dell Round Rock Campus, 501 Dell Way (Building 2-East), Round Rock, Texas 78682. On or about November 21, 2018, we mailed you an updated notice of the special meeting (the “November stockholder notice”). This notice confirms the information provided to you in such prior notices. At the special meeting, stockholders will be asked to take the following actions:

 

   

to adopt the Agreement and Plan of Merger, between Dell Technologies and Teton Merger Sub Inc., dated as of July 1, 2018, referred to herein as the merger agreement, as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated as of November 14, 2018, and as it may be further amended from time to time, referred to herein as the amended merger agreement, pursuant to which Teton Merger Sub Inc. will be merged with and into Dell Technologies, and Dell Technologies will continue as the surviving corporation, which transaction is referred to herein as the merger;

 

   

to adopt the Fifth Amended and Restated Certificate of Incorporation of Dell Technologies Inc., referred to herein as the amended and restated Company certificate, in the form attached as Exhibit A to the merger agreement amendment that is attached as Annex S-A to the accompanying supplement, which is part of the amended merger agreement;

 

   

to approve, on a non-binding, advisory basis, compensation arrangements with respect to the named executive officers of Dell Technologies related to the Class V transaction described in the proxy statement/prospectus, referred to herein as the transaction-related compensation proposal; and

 

   

to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to adopt the amended merger agreement or adopt the amended and restated Company certificate, referred to herein as the adjournment proposal.

A copy of the merger agreement is attached as Annex A to the proxy statement/prospectus and a copy of the merger agreement amendment is attached as Annex S-A to the accompanying supplement.

Dell Technologies will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournment or postponement thereof. Please refer to the accompanying supplement and the proxy statement/prospectus for further information with respect to the business to be transacted at the special meeting.

The Dell Technologies board of directors has fixed the close of business on October 18, 2018 as the record date for the special meeting. Only holders of record of Dell Technologies common stock as of the record date are entitled to notice of, and to vote at, the special meeting and any adjournment or postponement thereof.


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Attendance at the special meeting will be limited to Dell Technologies stockholders as of the record date and to guests of Dell Technologies, as more fully described under “Special Meeting of Stockholders—Date, Time and Location” on page 128 of the proxy statement/prospectus. Stockholders who come to the special meeting will be required to present evidence of stock ownership as of October 18, 2018. You can obtain this evidence from your bank, brokerage firm or other nominee, typically in the form of your most recent monthly statement. All stockholders who attend the meeting will be required to present valid government-issued picture identification, such as a driver’s license or passport, and will be subject to security screenings.

Adoption of the amended merger agreement and the amended and restated Company certificate each require the affirmative vote, in person or by proxy, of (1) holders of record of a majority of the outstanding shares of Class V Common Stock (excluding shares held by affiliates of Dell Technologies), voting as a separate class, (2) holders of record of a majority of the outstanding shares of Class A Common Stock, voting as a separate class, (3) holders of record of a majority of the outstanding shares of Class B Common Stock, voting as a separate class, and (4) holders of record of outstanding shares of Class V Common Stock, Class A Common Stock, Class B Common Stock and Class C Common Stock representing a majority of the voting power of the outstanding shares of all such series of common stock, voting together as a single class. Approval, on a non-binding, advisory basis, of the transaction-related compensation proposal and approval of the adjournment proposal each require the affirmative vote of holders of record of a majority of the voting power of the outstanding shares of Class V Common Stock, Class A Common Stock, Class B Common Stock and Class C Common Stock present in person or by proxy at the meeting and entitled to vote thereon, voting together as a single class.

Under Delaware law, if you are a holder of our Class A Common Stock, our Class B Common Stock or our Class C Common Stock and you do not vote in favor of the proposal to adopt the amended merger agreement, you have not otherwise waived your statutory appraisal right and you comply with other requirements, you are entitled to statutory appraisal rights under Delaware law in connection with the Class V transaction. If you comply with the requirements of Section 262 of the General Corporation Law of the State of Delaware, referred to herein as DGCL, you are entitled to have the “fair value” (as defined pursuant to Section 262 of the DGCL) of your shares of common stock determined by the Court of Chancery of the State of Delaware and to receive cash payment for those shares based on that valuation. The ultimate amount you would receive in an appraisal proceeding may be more than, the same as or less than the value of the shares you would own after the merger if you did not exercise your appraisal rights. Any holder of Class A Common Stock, Class B Common Stock or Class C Common Stock seeking to assert appraisal rights should carefully review the procedures described in the proxy statement/prospectus. A copy of the applicable provisions of the DGCL was attached as Exhibit E to the proxy statement/prospectus. In addition, a copy of the applicable provisions of the DGCL, as amended, effective August 1, 2018, was included in the November stockholder notice, and is attached as Annex S-E to this supplement. The amendments to such provisions of the DGCL, effective August 1, 2018, do not affect the manner by which any stockholder with appraisal rights would exercise such rights.

The Special Committee, comprised entirely of independent and disinterested directors, which was established to act solely on behalf of, and solely in the interests of, the holders of Class V Common Stock, unanimously recommends that all holders of the Class V Common Stock entitled to vote thereon vote “FOR” the adoption of the amended merger agreement and “FOR” the adoption of the amended and restated Company certificate. The board of directors unanimously recommends that all stockholders vote “FOR” the adoption of the amended merger agreement, “FOR” the adoption of the amended and restated Company certificate, “FOR” the approval of the transaction-related compensation proposal and “FOR” the approval of the adjournment proposal.

Your vote is very important. Whether or not you expect to attend the special meeting in person, if you have not already done so, we urge you to submit your proxy as promptly as possible by (i) accessing the internet website specified on your proxy card, (ii) calling the toll-free number specified on your proxy card or (iii) marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the special meeting. If you previously submitted a proxy for the special meeting of stockholders, which proxy has not subsequently been revoked, and you intend such proxy to be voted at the special meeting in the manner specified, you do not need to do anything further. If you previously submitted a proxy card and wish to revoke your proxy or change your


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voting instructions, we urge you to submit a later dated proxy card to have your shares voted as instructed on the proxy card mailed to you by Dell Technologies, which will revoke any earlier dated proxy card that you submitted. If your shares are held of record in the name of a nominee, please follow the instructions on the voting instruction form furnished by the nominee.

On November 15, 2018, the Icahn stockholders filed (i) a Schedule 13D/A with the SEC, which amends their prior Schedule 13D filed with the SEC on October 15, 2018, and (ii) definitive additional materials to their definitive proxy statement filed with the SEC on October 15, 2018, in each case disclosing their intention to terminate their opposition to the Class V transaction and their solicitation of the Company’s stockholders to vote against all proposals in the proxy statement/prospectus. Advisors to Dell Technologies have been informed by advisors to the Icahn stockholders that the Icahn stockholders do not intend to vote any proxies submitted to them on the gold proxy card at the special meeting. As a result, if you have previously submitted a gold proxy card sent to you by any Icahn stockholder or its affiliates, your vote will not be counted. We urge you to submit a later dated white proxy card that was enclosed with the proxy statement/prospectus or the November stockholder notice by (i) accessing the internet website specified on such proxy card, (ii) calling the toll-free number specified on such proxy card or (iii) marking, signing, dating and returning such proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the special meeting.

Additionally, in connection with the merger agreement amendment, we have updated the election form previously sent to you. We will use our reasonable efforts to cause an updated election form to be disseminated to persons who, as of the record date for the special meeting, were holders of record of shares of Class V Common Stock as soon as practicable following the filing of the accompanying supplement with the SEC. If you have not already submitted an election form or wish to change your election, we urge you to complete the updated election form when you receive it and submit it so that your election form is received by our exchange agent by 5:30 p.m., New York City time, on the eighth trading day following the date on which the Company issues a public announcement that the requisite stockholder approvals for the Class V transaction have been obtained. If you have previously submitted an election form, and you do not wish to change your election, you do not need to do anything further because the increase in the share consideration and the cash consideration pursuant to the merger agreement amendment will automatically apply to your election choices indicated in the prior election form. If you fail to submit a properly completed election form by this deadline or fail to properly elect which form of consideration to receive, you will be deemed to have made a share election and will receive solely shares of Class C Common Stock (other than cash received in lieu of a fractional share of Class C Common Stock).

We urge you to read, carefully and in their entirety, the accompanying supplement and the proxy statement/prospectus, including all documents incorporated by reference into the proxy statement/prospectus and the accompanying supplement, and each of their annexes. In particular, see “Risk Factors,” which begins on page 60 of the proxy statement/prospectus, and “Update to Risk Factors,” which begins on page S-33 of the accompanying supplement. If you have any questions concerning the Class V transaction, the merger, the amended merger agreement, the special meeting, the accompanying supplement or the proxy statement/prospectus, would like additional copies of the accompanying supplement or the proxy statement/prospectus or need assistance or help submitting a proxy to have your shares of Dell Technologies common stock voted, please contact Innisfree M&A Incorporated:

Innisfree M&A Incorporated

Stockholders may call toll free: (877) 717-3936

Stockholders outside of the United States and Canada may call: +1 (412) 232-3651

Banks and Brokers may call collect: (212) 750-5833

By Order of the Board of Directors,

Richard J. Rothberg

General Counsel and Secretary


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EXPLANATORY NOTE

   S-1

UPDATE TO QUESTIONS AND ANSWERS REGARDING THE CLASS V TRANSACTION AND THE SPECIAL MEETING

   S-4

UPDATE TO SUMMARY

   S-14

UPDATE TO RISK FACTORS

   S-33

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

   S-41

UPDATE TO COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

   S-43

UPDATE TO MANAGEMENT OF DELL TECHNOLOGIES AFTER THE CLASS V TRANSACTION

   S-45

UPDATE TO SPECIAL MEETING OF STOCKHOLDERS

   S-49

UPDATE TO ELECTION TO RECEIVE CLASS C COMMON STOCK OR CASH CONSIDERATION

   S-50

UPDATE TO PROPOSAL 1—ADOPTION OF THE MERGER AGREEMENT

   S-56

UPDATE TO THE MERGER AGREEMENT

   S-98

UPDATE TO PROPOSAL 2—ADOPTION OF AMENDED AND RESTATED COMPANY CERTIFICATE

   S-106

UPDATE TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

   S-108

UPDATE TO DESCRIPTION OF CAPITAL STOCK BEFORE AND AFTER THE CLASS V TRANSACTION

   S-117

UPDATE TO COMPARISON OF RIGHTS OF CLASS V STOCKHOLDERS AND CLASS C STOCKHOLDERS

   S-119

WHERE YOU CAN FIND MORE INFORMATION

   S-120

ANNEXES

 

Annex S-A:    Merger Agreement Amendment (including the Form of Fifth Amended and Restated Certificate of Incorporation as Exhibit A and the Form of Second Amended and Restated Bylaws as Exhibit B)
Annex S-B:    Proposed Amendments to the Company’s Certificate of Incorporation
Annex S-C:    Proposed Amendments to the Company’s Bylaws
Annex S-D:    Opinion of Evercore Group L.L.C. dated November 14, 2018
Annex S-E:    Section 262 of General Corporation Law of the State of Delaware

 

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EXPLANATORY NOTE

This supplement to the proxy statement/prospectus of Dell Technologies, dated October 19, 2018, which was first mailed on or about October 23, 2018 to Dell Technologies stockholders who were record holders of our common stock as of October 18, 2018, is being provided to you because the parties thereto have entered into an amendment to the Agreement and Plan of Merger, dated as of July 1, 2018, by and between Dell Technologies Inc. and Teton Merger Sub Inc. The merger agreement amendment, among other things, (i) increases the maximum amount of cash consideration payable to the holders of our Class V Common Stock in the Class V transaction from $9 billion to $14 billion, (ii) increases the per share cash consideration payable to the holders of the Class V Common Stock electing to receive cash consideration from $109.00, without interest, to $120.00, without interest, and (iii) increases the ratio at which each share of Class V Common Stock may be exchanged from 1.3665 shares of Class C Common Stock to at least 1.5043 shares of Class C Common Stock. In addition, the merger agreement amendment provides for certain corporate governance changes and a change to the election deadline as described elsewhere in this supplement.

This supplement and the annexes hereto should be read in conjunction with the proxy statement/prospectus, the annexes to the proxy statement/prospectus and the documents referred to or incorporated by reference into the proxy statement/prospectus and this supplement, each of which should be read in its entirety.

Except as otherwise described in this supplement and the annexes to this supplement, the proxy statement/prospectus, the annexes to the proxy statement/prospectus and the documents referred to or incorporated by reference into the proxy statement/prospectus and this supplement, are not otherwise modified, supplemented or amended. To the extent that information included in or incorporated by reference into this supplement differs from, updates or conflicts with information included in or incorporated by reference into the proxy statement/prospectus, the information in this supplement shall supersede or supplement the information in the proxy statement/prospectus.

Unless otherwise indicated or as the context otherwise requires, a reference in this supplement to:

 

   

“alternative financing” has the meaning given to such term in this supplement under the heading “Update to Proposal 1—Adoption of the Merger Agreement—Financing of the Increased Maximum Aggregate Amount of Cash Consideration”;

 

   

“Amended Sponsor Stockholders Agreements” refers to the MD Stockholders Agreement and the SLP Stockholders Agreement, collectively;

 

   

“credit agreement” refers to the credit agreement, dated as of September 7, 2016, by and among Denali Intermediate, Dell, Dell International, EMC (as successor to Universal Acquisition Co.), Credit Suisse AG, Cayman Islands Branch, as Term Loan B administrative agent and collateral agent, JPMorgan Chase Bank, N.A., as Term Loan A/Revolver administrative agent, and the lenders party thereto (as it may be amended, supplemented or modified from time to time);

 

   

“debt financing” has the meaning given to such term in this supplement under the heading “Update to Proposal 1—Adoption of the Merger Agreement—Financing of the Increased Maximum Aggregate Amount of Cash Consideration”;

 

   

“Dell International” refers to Dell International L.L.C., a Delaware limited liability company;

 

   

“Denali Intermediate” refers to Denali Intermediate Inc., a Delaware corporation;

 

   

“DVMT Trading Price” refers to the 17-day aggregate volume-weighted average price per share of Class V Common Stock on the NYSE (as reported on Bloomberg) for a period of 17 consecutive trading days ending on the date of the election deadline;

 

   

“election deadline” refers to 5:30 p.m., New York City time, on the eighth trading day following the date on which the Company issues a public announcement that the stockholder proposals described in

 

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the proxy statement/prospectus under “Proposal 1—Adoption of the Merger Agreement” and “Proposal 2—Adoption of Amended and Restated Company Certificate,” as supplemented by the updates described in this supplement under “Update to Proposal 1—Adoption of the Merger Agreement” and “Update to Proposal 2—Adoption of Amended and Restated Company Certificate,” have been approved by the stockholders of the Company;

 

   

“exchange ratio” refers to the minimum exchange ratio as increased by the exchange ratio adjustment (provided that the exchange ratio does not exceed the maximum exchange ratio);

 

   

“exchange ratio adjustment” refers to certain adjustments to the exchange ratio as described in this supplement under the heading “Update to Questions and Answers Regarding the Class V Transaction and the Special Meeting—Q: How will the applicable exchange ratio be calculated?” and “Update to Election to Receive Class C Common Stock or Cash Consideration”;

 

   

“existing Company bylaws” refers to the Amended and Restated Bylaws of Dell Technologies Inc.;

 

   

“maximum exchange ratio” refers to 1.8130 shares of Class C Common Stock issuable in exchange for each share of Class V Common Stock in the Class V transaction;

 

   

“merger agreement amendment” refers to Amendment No. 1 to the Agreement and Plan of Merger, dated as of November 14, 2018, by and between Dell Technologies Inc. and Teton Merger Sub Inc.;

 

   

“minimum exchange ratio” refers to 1.5043 shares of Class C Common Stock issuable in exchange for each share of Class V Common Stock in the Class V transaction;

 

   

“MD Stockholders Agreement” refers to the MD Stockholders Agreement to be effective upon the completion of the Class V transaction, by and among the Company and Denali Intermediate , Dell, EMC, Denali Finance Corp., Dell International, Michael S. Dell and the Susan Lieberman Dell Separate Property Trust;

 

   

“MSD Partners Stockholders Agreement” refers to the MSD Partners Stockholders Agreement to be effective upon the completion of the Class V transaction, by and among the Company and Denali Intermediate, Dell, EMC, Denali Finance Corp., Dell International, MSDC Denali Investors, L.P., MSDC Denali EIV, LLC and the other stockholders named therein;

 

   

“proxy statement/prospectus” refers to the proxy statement/prospectus included in the Registration Statement on Form S-4 and mailed to stockholders of Dell Technologies on or about October 23, 2018;

 

   

“Registration Statement on Form S-4” refers to the registration statement on Form S-4 (File No. 333-226618) filed by Dell Technologies with the SEC and declared effective by the SEC on October 19, 2018; and

 

   

“SLP Stockholders Agreement” refers to the SLP Stockholders Agreement to be effective upon the completion of the Class V transaction, by and among the Company and Denali Intermediate, Dell, EMC, Denali Finance Corp., Dell International, Silver Lake Partners III, L.P., Silver Lake Technology Investors III, L.P. Silver Lake Partners IV, L.P., Silver Lake Technology Investors IV, L.P., SLP Denali Co-Invest, L.P. and the other stockholders named therein.

In this supplement, unless otherwise indicated, the number of shares of our common stock to be outstanding after the completion of the Class V transaction is based on 768,371,322 shares of our common stock outstanding as of October 15, 2018.

In addition, where we have presented pro forma information assuming that all holders of Class V Common Stock elect to receive shares of Class C Common Stock in the Class V transaction, such information has been calculated based on the minimum exchange ratio, regardless of the DVMT Trading Price, because only the minimum exchange ratio will apply.

Additionally, in this supplement and in the proxy statement/prospectus, unless the context otherwise requires, all references to (i) the “merger agreement” shall be deemed to refer, where applicable, to the

 

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Agreement and Plan of Merger, dated as of July 1, 2018, as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated as of November 14, 2018, between the Company and Merger Sub, as it may be further amended from time to time, (ii) the “amended and restated Company certificate” shall be deemed to refer, where applicable, to the form of the fifth amended and restated Company certificate attached as Exhibit A to the merger agreement amendment that is attached as Annex S-A to this supplement and (iii) the “Company bylaws” following the completion of the Class V transaction shall be deemed to refer, where applicable, to the form of the second amended and restated Company bylaws attached as Exhibit B to the merger agreement amendment that is attached as Annex S-A to this supplement.

Capitalized terms used and not defined in this supplement have the meanings set forth in the proxy statement/prospectus.

 

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UPDATE TO QUESTIONS AND ANSWERS REGARDING THE CLASS V TRANSACTION AND THE SPECIAL MEETING

The following questions and answers are intended to briefly address some commonly asked questions regarding the merger agreement amendment, the debt financing and the special meeting of stockholders. These questions and answers may not address all questions that may be important to you as a stockholder of the Company. Please refer to the more detailed information contained elsewhere in this supplement, the annexes to this supplement, the proxy statement/prospectus, the annexes to the proxy statement/prospectus and the documents referred to or incorporated by reference into the proxy statement/prospectus and this supplement. See “Where You Can Find More Information” for information on how you can obtain copies of the incorporated documents or view them via the internet.

 

Q:

Why am I receiving this supplement to the proxy statement/prospectus?

 

A:

You have been sent this supplement to the proxy statement/prospectus because the Company and Merger Sub have entered into the merger agreement amendment, which is attached as Annex S-A to this supplement. This supplement provides information about the merger agreement amendment and the changes to the Class V transaction as a result of the merger agreement amendment and updates the proxy statement/prospectus that was previously mailed to you.

 

Q:

What are the amendments to the merger agreement?

 

A:

The merger agreement amendment amends the merger agreement to provide for the following:

 

   

Increased consideration for the Class V transaction: (i) increases the maximum amount of cash consideration payable to the holders of our Class V Common Stock in the Class V transaction from $9 billion to $14 billion, (ii) increases the per share cash consideration payable to the holders of the Class V Common Stock electing to receive cash consideration from $109.00, without interest, to $120.00, without interest, and (iii) increases the ratio at which each share of Class V Common Stock may be exchanged from 1.3665 shares of Class C Common Stock to at least 1.5043 shares of Class C Common Stock. Under the amended merger agreement, each share of our Class V Common Stock will be converted into the right to receive, at the election of the holder of such share, either (1) such number of shares of our Class C Common Stock as determined by the application of the exchange ratio, which will be between 1.5043 and 1.8130 (as described below under “—Q: How will the applicable exchange ratio be calculated?”) (with holders to receive not less than 1.5043 shares of Class C Common Stock for each share of Class V Common Stock that is exchanged pursuant to the Class V transaction), or (2) $120.00 in cash, without interest, subject to a cap of $14 billion on the aggregate amount of cash consideration;

 

   

Corporate governance changes: (i) changes the amended and restated Company certificate to (x) grant to holders of Class C Common Stock the right, voting separately as a series, to elect one director at each annual meeting of stockholders of the Company, beginning with the second annual meeting of stockholders of the Company following the completion of the Class V transaction and (y) provide that the determination of the size of the board of directors of the Company will be determined in accordance with the bylaws (which bylaws may be amended by the board of directors or with the approval of the stockholders of the Company holding common stock representing a majority of the voting power of our outstanding common stock) and (ii) requiring that, by no later than June 30, 2019, (x) the board of directors of the Company appoint to the board a fourth independent director after consultation with holders of Class C Common Stock and (y) the Company establish a nominating and corporate governance committee of the board of directors that will, among its other responsibilities, select or recommend to the board a director nominee for election or re-election by the holders of Class C Common Stock, voting separately as a series;

 

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Debt financing: contemplates the incurrence of up to $5 billion of gross proceeds in debt financing in order to fund the increase in the maximum aggregate amount of cash consideration;

 

   

Election deadline: extends the election deadline to 5:30 p.m., New York City time, on the eighth trading day following the date on which the Company issues a public announcement that the requisite stockholder approvals for the Class V transaction have been obtained; and

 

   

Conditions: adds as conditions to the completion of the Class V transaction that (i) in the event the aggregate cash consideration elected by holders of Class V Common Stock is equal to or greater than the $14 billion cap, the relevant Company subsidiaries will have received $5 billion of gross proceeds from debt financing (or, in the event that the aggregate cash consideration elected by holders of Class V Common Stock is greater than the $9 billion but less than $14 billion, the relevant Company subsidiaries will have received an amount of gross proceeds from debt financing equal to the aggregate cash consideration elected by holders of Class V Common Stock, less $9 billion) (the foregoing referred to as the debt financing condition), (ii) each Company subsidiary through which proceeds of such debt financing will pass in order to be received by the Company must have determined that such subsidiary meets all solvency and legal requirements to dividend, distribute, loan or otherwise transfer the proceeds of such debt financing or any alternative financing that it will receive in accordance with the plan of distribution established by the Company and (iii) any transfers of Class V Common Stock following the election deadline but prior to the closing of the Class V transaction shall not have resulted in the aggregate number of shares of Class C Common Stock to be issued as share consideration exceeding the aggregate number of shares of Class C Common Stock registered pursuant to the Company’s Registration Statement on Form S-4.

This description of the merger agreement amendment does not purport to be complete and is subject to, and qualified in its entirety by reference to, the merger agreement amendment, which is attached as in Annex S-A to this supplement, and the merger agreement, which is attached as Annex A to the proxy statement/prospectus, each of which is incorporated by reference into this supplement and the proxy statement/prospectus.

 

Q:

Please explain the Class V transaction.

 

A:

The Class V transaction gives Class V stockholders the option to participate in the future value creation of Dell Technologies through ownership of the Class C Common Stock or to receive cash, and will also eliminate our tracking stock structure, as follows:

 

   

for each share of Class V Common Stock, holders may elect to receive either (1) such number of shares of our Class C Common Stock as determined by the application of the exchange ratio, which will be between 1.5043 and 1.8130 (as described below under “—Q: How will the applicable exchange ratio be calculated?”) (with holders to receive not less than 1.5043 shares of Class C Common Stock for each share of Class V Common Stock that is exchanged pursuant to the Class V transaction), or (2) $120.00 in cash, without interest, subject to a cap of $14 billion on the aggregate amount of cash consideration, with the final mix of consideration that holders of Class V Common Stock receive subject to the application of proration to cash elections, if applicable, as described below under “—Q: How will proration of a cash election be calculated under the amended merger agreement?”; and

 

   

the Class V Common Stock will be eliminated.

Class V stockholders that fail to make an election will be deemed to have elected to receive shares of Class C Common Stock. Immediately prior to the completion of the Class V transaction, subject to approval and the satisfaction of other conditions of the Class V transaction, as well as certain other conditions described elsewhere in this supplement, VMware will pay a special cash dividend to its stockholders of $11 billion in the aggregate. Approximately $8.92 billion of the VMware cash dividend will be received by Dell Technologies and used to fund a portion of the cash consideration paid to holders of the Class V Common Stock.

 

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Q:

What will holders of Class V Common Stock receive in the Class V transaction?

 

A:

At the effective time of the merger, each share of Class V Common Stock issued and outstanding immediately before the effective time will be cancelled and converted into the right to receive, at the election of the holder, either:

 

   

at least 1.5043 shares of Class C Common Stock (but no more than 1.8130 shares of Class C Common Stock), in the case of each share of Class V Common Stock for which a share election has been validly made by the holder and not validly revoked, or

 

   

$120.00 in cash, without interest, in the case of each share of Class V Common Stock for which a cash election has been validly made by the holder and not validly revoked, subject to proration as described below.

With respect to any share consideration received by holders, holders will receive not less than 1.5043 shares of Class C Common Stock for each share of Class V Common Stock that is exchanged pursuant to the Class V transaction.

If a holder fails to properly elect which form of consideration to receive, such holder will be deemed to have made a share election and will receive solely shares of Class C Common Stock (other than cash received in lieu of a fractional share of Class C Common Stock).

 

Q:

How will the applicable exchange ratio be calculated?

 

A:

In the event that all holders of Class V Common Stock make, or are deemed to have made, share elections to receive solely shares of Class C Common Stock by the election deadline, each share of Class V Common Stock will be exchanged at the minimum exchange ratio of 1.5043 shares of Class C Common Stock.

In the event that not all holders of Class V Common Stock make, or are deemed to have made, share elections by the election deadline, then the minimum exchange ratio will be increased by the exchange ratio adjustment, which amount will be a number of shares equal to (a) 0.01998 multiplied by (b) the lesser of (x) $15.45 and (y) the amount (which may be zero but, for the avoidance of doubt, not less than zero) by which the DVMT Trading Price is less than $120.00 multiplied by (c) the lesser of (x) 1.0 and (y) a fraction (i) the numerator of which is equal to the aggregate amount of cash elections as of the election deadline (without giving effect to any transfers of shares of Class V Common Stock which occur after the election deadline) and (ii) the denominator of which is equal to $14 billion, provided that the exchange ratio adjustment will not exceed 0.3087. In the event that the maximum amount of the exchange ratio adjustment is applicable, each share of Class V Common Stock will be exchanged at the maximum exchange ratio of 1.8130. The applicable exchange ratio generally will increase as the aggregate amount of cash elections increases and as the DVMT Trading Price decreases, subject to the maximum exchange ratio.

With respect to any share consideration received by holders, holders will receive not less than 1.5043 shares of Class C Common Stock for each share of Class V Common Stock that is exchanged pursuant to the Class V transaction.

The DVMT Trading Price is the 17-day aggregate volume-weighted average price per share of Class V Common Stock on the NYSE (as reported on Bloomberg) for a period of 17 consecutive trading days ending on the date of the election deadline.

Holders of Class V Common Stock will not know the applicable exchange ratio at the time they make their election because the applicable exchange ratio is dependent upon the aggregate amount of cash elections made by holders of Class V Common Stock and the DVMT Trading Price, neither of which will be known by the election deadline. However, beginning on the eighth trading day prior to the date of the special meeting of stockholders, the Company expects to make publicly available on its website each day unofficial estimates of the aggregate amount of cash elections and share elections as of 5:30 p.m., New York City time, on the trading day prior to such publication that are based on preliminary reports from the exchange agent, in order to provide Class V stockholders with the most recent information available. Holders should

 

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exercise caution in relying on these numbers, since they may not reflect the elections of large Class V stockholders whose elections may not be made until late in the process, and whose elections may significantly impact the aggregate amount of cash elections and share elections and thereby, the final exchange ratio.

The following tables illustrate (i) the applicable exchange ratio based on hypothetical DVMT Trading Prices, assuming holders of Class V Common Stock elect in the aggregate to receive the cash consideration shown in the first column and (ii) the corresponding economic ownership in Dell Technologies that will be held by current holders of Class V Common Stock (on a fully-diluted basis).

Exchange ratio:

 

Aggregate Cash Election Amount
(in billions)

   Illustrative DVMT Trading Price  
   $120.00      $118.00      $116.00      $114.00      $112.00      $110.00      $108.00      $106.00      $104.55  

$0.0

     1.5043        1.5043        1.5043        1.5043        1.5043        1.5043        1.5043        1.5043        1.5043  

$2.0

     1.5043        1.5100        1.5157        1.5214        1.5271        1.5328        1.5386        1.5443        1.5484  

$4.0

     1.5043        1.5157        1.5271        1.5386        1.5500        1.5614        1.5728        1.5842        1.5925  

$6.0

     1.5043        1.5214        1.5386        1.5557        1.5728        1.5899        1.6071        1.6242        1.6366  

$8.0

     1.5043        1.5271        1.5500        1.5728        1.5956        1.6185        1.6413        1.6641        1.6807  

$10.0

     1.5043        1.5328        1.5614        1.5899        1.6185        1.6470        1.6756        1.7041        1.7248  

$12.0

     1.5043        1.5386        1.5728        1.6071        1.6413        1.6756        1.7098        1.7441        1.7689  

$14.0

     1.5043        1.5443        1.5842        1.6242        1.6641        1.7041        1.7441        1.7840        1.8130  

Economic ownership percentage:

 

Aggregate Cash Election Amount
(in billions)

   Illustrative DVMT Trading Price  
   $120.00      $118.00      $116.00      $114.00      $112.00      $110.00      $108.00      $106.00      $104.55  

$0.0

     32.8%        32.8%        32.8%        32.8%        32.8%        32.8%        32.8%        32.8%        32.8%  

$2.0

     30.9%        31.0%        31.1%        31.1%        31.2%        31.3%        31.4%        31.5%        31.5%  

$4.0

     28.9%        29.1%        29.2%        29.4%        29.5%        29.7%        29.8%        30.0%        30.1%  

$6.0

     26.8%        27.0%        27.2%        27.4%        27.7%        27.9%        28.1%        28.3%        28.5%  

$8.0

     24.5%        24.8%        25.1%        25.3%        25.6%        25.9%        26.2%        26.4%        26.6%  

$10.0

     22.1%        22.4%        22.8%        23.1%        23.4%        23.7%        24.0%        24.3%        24.6%  

$12.0

     19.6%        19.9%        20.3%        20.6%        21.0%        21.3%        21.7%        22.0%        22.2%  

$14.0

     16.8%        17.2%        17.6%        17.9%        18.3%        18.7%        19.0%        19.4%        19.6%  

The table below illustrates the number of shares of Class C Common Stock to be issued, the total number of shares of our common stock that will be outstanding and the economic ownership percentage in the Company (on a fully-diluted basis) that will be held by current holders of Class V Common Stock, in each case, assuming that such holders elect to receive $14 billion or more of cash:

 

     Illustrative DVMT Trading Price  
   $120.00      $118.00      $116.00      $114.00      $112.00      $110.00      $108.00      $106.00      $104.55  

Class C Shares Issued
(in millions)

     124.4        127.7        131.0        134.3        137.6        140.9        144.2        147.5        149.9  

Total Common Stock
(in millions)

     739.0        742.3        745.6        748.9        752.2        755.5        758.8        762.1        764.5  

Economic Ownership %

     16.8%        17.2%        17.6%        17.9%        18.3%        18.7%        19.0%        19.4%        19.6%  

Assuming all holders of Class V Common Stock elect to receive shares of Class C Common Stock in the Class V Transaction, upon the completion of the Class V transaction, approximately 299.9 million shares of Class C Common Stock will be issued, the Company will have approximately 914.5 million shares of common stock in total outstanding and the economic ownership percentage in the Company (on a fully-diluted basis) that will be held by current holders of Class V Common Stock will be approximately 32.8%.

 

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Q:

What is the source of funding for the increase in maximum aggregate cash consideration?

 

A:

On November 14, 2018, Dell entered into a debt commitment letter with Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank PLC, Citigroup Global Markets Inc., Citibank, N.A., Citicorp USA, Inc., Citicorp North America, Inc., Credit Suisse AG, Cayman Islands Branch, Credit Suisse Loan Funding LLC, Goldman Sachs Bank, USA, JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc., Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc., Royal Bank of Canada and RBC Capital Markets, UBS AG, Stamford Branch, and UBS Securities LLC, providing for up to $5 billion in incremental debt financing under our senior secured credit facilities. It is also contemplated that, in lieu of the incremental term loan facility (as defined under “Update to Proposal 1—Adoption of the Merger Agreement—Financing of the Increased Maximum Aggregate Amount of Cash Consideration”), the Company or one or more of its subsidiaries may obtain alternate debt financing, the proceeds of which will reduce commitments in respect of the incremental term loan facility on a dollar-for-dollar basis. Upon satisfaction or (to the extent permitted by law) waiver of certain conditions, we expect such borrowings will be available on the funding date (as defined under “Update to Proposal 1—Adoption of the Merger Agreement—Financing of the Increased Maximum Aggregate Amount of Cash Consideration”) in an amount sufficient to fund the increase in the maximum aggregate amount of cash consideration. See “Update to Proposal 1—Adoption of the Merger Agreement—Financing of the Increased Maximum Aggregate Amount of Cash Consideration.” Such debt financing commitments will terminate upon the earlier of the termination of the amended merger agreement in accordance with its terms and February 7, 2019.

 

Q:

How will the amended merger agreement impact my election to receive a particular type of merger consideration?

 

A:

We believe that the increase in the maximum aggregate amount of cash consideration and the per share cash consideration and the increased exchange ratio provide the Class V stockholders with greater flexibility and value certainty if the Class V transaction is completed. If all Class V stockholders make cash elections, the percentage of the transaction consideration consisting of cash that will be received by Class V shareholders will increase from approximately 41.4% to approximately 58.5%.

The mix of share elections and cash elections and the DVMT Trading Price will determine how many shares of Class C Common Stock we will issue in the Class V transaction. For example, based on shares of our common stock outstanding as of October 15, 2018:

 

   

if all holders of Class V Common Stock make share elections, the applicable exchange ratio will be 1.5043 (which would represent the minimum exchange ratio) regardless of the DVMT Trading Price, and therefore we estimate that we would issue a total of approximately 299,892,120 shares of Class C Common Stock, which would represent approximately 32.8% of our total common stock on a fully diluted basis outstanding immediately after the Class V transaction, and approximately 5.1% of the total voting power of our outstanding common stock;

 

   

if (x) holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and (y) the DVMT Trading Price is $104.55 or less, the applicable exchange ratio will be 1.8130 (which would represent the maximum exchange ratio), and therefore we estimate that we would issue a total of approximately 149,916,832 shares of Class C Common Stock, which would represent approximately 19.6% of our total common stock on a fully diluted basis outstanding immediately after the Class V transaction, and approximately 2.6% of the total voting power of our outstanding common stock; and

 

   

if (x) holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and (y) the DVMT Trading Price is $120.00 or greater, the applicable exchange ratio will be 1.5043 (which would represent the minimum exchange ratio), we estimate that we would issue a total of approximately 124,390,453 shares of Class C Common Stock, which would represent approximately

 

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16.8% of our total common stock on a fully diluted basis outstanding immediately after the Class V transaction, and approximately 2.2% of the total voting power of our outstanding common stock.

With respect to any share consideration received by holders, holders will receive not less than 1.5043 shares of Class C Common Stock for each share of Class V Common Stock that is exchanged pursuant to the Class V transaction.

 

 

Q:

How does the Special Committee recommend that holders of the Class V Common Stock vote?

 

A:

The Special Committee, which was established to act solely on behalf of, and solely in the interests of, the holders of Class V Common Stock unanimously recommends that all holders of the Class V Common Stock entitled to vote thereon vote “FOR” the adoption of the amended merger agreement and “FOR” the adoption of the amended and restated Company certificate.

 

Q:

How does our board of directors recommend that stockholders vote?

 

A:

The board of directors unanimously recommends that all stockholders vote “FOR” the adoption of the amended merger agreement, “FOR” the adoption of the amended and restated Company certificate, “FOR” the approval of the transaction-related compensation proposal and “FOR” the approval of the adjournment proposal.

 

Q:

Is the number of shares of Class C Common Stock to be issued in connection with the Class V transaction limited?

 

A:

No. However, it is a condition to the closing of the Class V transaction that any transfers of Class V Common Stock following the election deadline but prior to the closing of the Class V transaction shall not have resulted in the aggregate number of shares of Class C Common Stock to be issued as share consideration exceeding the aggregate number of shares of Class C Common Stock registered pursuant to our Registration Statement on Form S-4.

 

Q:

Is the amount of cash payable in the Class V transaction limited?

 

A:

Yes. The total amount of cash payable in the Class V transaction is limited to $14 billion (other than cash payable in lieu of fractional shares of Class C Common Stock).

 

Q:

What happens if holders of Class V Common Stock do not elect in the aggregate to receive more than $14 billion in cash?

 

A:

If holders of Class V Common Stock do not elect to receive more than $14 billion in cash, all holders will receive the form of consideration they elected to receive or were deemed to have elected to receive, and the exchange ratio will adjust as noted above under “—Q: How will the applicable exchange ratio be calculated?

 

Q:

What happens if holders of Class V Common Stock elect in the aggregate to receive more than $14 billion in cash?

 

A:

If holders of Class V Common Stock elect to receive more than $14 billion in cash, holders making cash elections will be subject to proration, and a portion of the consideration they requested in cash will instead be received in the form of shares of Class C Common Stock.

 

Q:

Is the Company or VMware incurring any debt in connection with the Class V transaction?

 

A:

The Company expects to incur up to $5 billion of debt, which we will use, together with our pro rata portion of the proceeds of a special cash dividend by VMware, to fund substantially all of the cash elections. We

 

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  will fund any remaining balance, which is not expected to be material, from cash on hand. The dividend was declared by VMware’s board of directors on July 1, 2018 and, subject to the contingencies discussed in the proxy statement/prospectus, is payable to VMware stockholders that include our wholly owned subsidiaries. VMware is not expected to incur any debt to pay the special cash dividend.

If the Class V transaction is not completed, the VMware special dividend will not be paid and the Company does not expect to consummate the debt financing.

 

Q:

What are the conditions to the completion of the merger?

 

A:

In addition to stockholder adoption of the amended merger agreement and the amended and restated Company certificate at the special meeting and the satisfaction of a number of other conditions, including the payment of the $11 billion VMware special dividend, as described in the proxy statement/prospectus under “The Merger Agreement—Conditions to the Merger,” the merger agreement amendment adds the following conditions as further described in this supplement under “Update to the Merger Agreement—Conditions to the Merger”:

 

   

in the event that the aggregate amount of all cash elections is (i) equal to or greater than $14 billion, the borrowers or their affiliates must have received or will receive, concurrently with the closing of the merger, $5 billion of gross proceeds from the debt financing or any alternative financing or (ii) greater than $9 billion but less than $14 billion, the borrowers or their affiliates will have received or will receive, concurrently with the closing of the merger, an amount of gross proceeds from the debt financing or any alternative financing equal to the aggregate amount of all cash elections less $9 billion;

 

   

each Company subsidiary through which proceeds of such debt financing will pass in order to be received by the Company must have determined that such subsidiary meets all solvency and legal requirements to dividend, distribute, loan or otherwise transfer the proceeds of such debt financing or alternative financing that it will receive in accordance with the plan of distribution established by the Company; and

 

   

any transfers of Class V Common Stock following the election deadline but prior to the closing of the Class V transaction must not have resulted in the aggregate number of shares of Class C Common Stock to be issued as share consideration exceeding the aggregate number of shares of Class C Common Stock registered pursuant to the Company’s Registration Statement on Form S-4.

If the aggregate amount of all cash elections is less than or equal to $9 billion, then the debt financing condition will not apply and there will be no condition related to the debt financing or any alternative financing.

 

Q:

Will the Class C Common Stock be listed on a stock exchange?

 

A:

Yes. The amended merger agreement requires that the Class C Common Stock be listed on the NYSE. Under the terms of the amended merger agreement, it is a condition to the completion of the merger that the shares of our Class C Common Stock be approved for listing on the NYSE, subject to official notice of issuance and our compliance with all applicable listing standards of the NYSE on the date on which such shares begin trading on the NYSE. See “Update to Merger Agreement—Conditions to the Merger. ” We have applied to list our shares of Class C Common Stock for trading on the NYSE upon the completion of the Class V transaction.

The Class C Common Stock issued in connection with the Class V transaction will be freely transferable by our non-affiliates and will trade just like any other publicly listed common stock. Our other series of common stock that will be outstanding after the Class V transaction, consisting of our Class A Common Stock and Class B Common Stock, will not be publicly traded.

 

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Q:

How will proration of a cash election be calculated under the amended merger agreement?

 

A:

We will:

 

   

first, calculate the proration factor, which is the percentage of shares of Class V Common Stock covered by a cash election that will be payable in cash, by dividing the $14 billion cash election cap by the total amount of all cash elections; and

 

   

second, determine the number of shares of Class V Common Stock covered by the cash election that will be payable in cash by multiplying the total number of shares covered by the cash election by the proration factor, with the remainder of such shares to be exchanged for shares of Class C Common Stock (subject to the application of the applicable exchange ratio).

For example, if holders of Class V Common Stock elect in the aggregate to receive $15 billion in cash (representing approximately 62.7% of all outstanding shares of Class V Common Stock), the proration factor would be approximately 0.933 ($14 billion divided by $15 billion). A holder submitting a cash election for 1,000 shares of Class V Common Stock would be entitled to receive (1) cash in exchange for 933 of such shares (1,000 shares multiplied by the proration factor of 0.933) at $120.00 per share, or a total of $111,960, and (2) shares of Class C Common Stock for the remaining 67 shares of Class V Common Stock at the applicable exchange ratio and cash in lieu of any fractional shares of Class C Common Stock. With respect to such 67 shares of Class V Common Stock, (x) if the DVMT Trading Price is $120.00 or greater, the applicable exchange ratio will be 1.5043 (representing the minimum exchange ratio), and therefore such holder would be entitled to receive a total of 100 shares of Class C Common Stock and cash in lieu of 0.7881 fractional shares of Class C Common Stock and (y) if the DVMT Trading Price is $104.55 or less, the applicable exchange ratio will be 1.8130 (representing the maximum exchange ratio), and therefore such holder would be entitled to receive a total of 121 shares of Class C Common Stock and cash in lieu of 0.4710 fractional shares of Class C Common Stock.

If all holders of Class V Common Stock make cash elections (representing elections in the aggregate to receive approximately $23.9 billion in cash), the proration factor would be approximately 0.585 ($14 billion divided by approximately $23.9 billion). A holder submitting a cash election for 1,000 shares of Class V Common Stock would be entitled to receive (1) cash in exchange for 585 of such shares (1,000 shares multiplied by the proration factor) at $120.00 per share, or a total of $70,200, and (2) shares of Class C Common Stock for the remaining 415 shares of Class V Common Stock at the applicable exchange ratio and cash in lieu of any fractional shares of Class C Common Stock. With respect to such 415 shares of Class V Common Stock, (x) if the DVMT Trading Price is $120.00 or greater, the applicable exchange ratio will be 1.5043 (representing the minimum exchange ratio) and therefore such holder would be entitled to receive a total of 624 shares of Class C Common Stock and cash in lieu of 0.2845 fractional shares of Class C Common Stock and (y) if the DVMT Trading Price is $104.55 or less, the applicable exchange ratio will be 1.8130 (representing the maximum exchange ratio), and therefore such holder would be entitled to receive a total of 752 shares of Class C Common Stock and cash in lieu of 0.3950 fractional shares of Class C Common Stock.

If holders of Class V Common Stock do not elect to receive more than $14 billion in cash consideration, all holders will receive the form of consideration they elected to receive or were deemed to elect to receive.

See “Update to Election to Receive Class C Common Stock or Cash ConsiderationProration of Aggregate Cash Consideration” for additional information on the proration of the aggregate cash consideration.

 

Q:

If the holders of Class V Common Stock elect in the aggregate to receive less than $14 billion of cash consideration, what will Dell Technologies do with the additional cash that it receives from the VMware special dividend and/or the debt financing?

 

A:

In the event that holders of Class V Common Stock make cash elections in an aggregate amount of more than $9 billion but less than $14 billion, we expect to incur an amount of debt financing sufficient to fund

 

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  the excess cash election amount over $9 billion. If the cash from the special dividend from VMware is sufficient to fund substantially all cash elections, we do not expect to incur any debt for this purpose. If any cash from the special dividend from VMware remains following the elections by holders of the Class V Common Stock, we plan to use such remaining cash to repurchase shares of Class C Common Stock or pay down debt.

 

Q:

What happens if I already submitted a proxy card for the special meeting of stockholders and/or election form?

 

A:

If you previously submitted a proxy for the special meeting of stockholders, which proxy has not subsequently been revoked, and you intend such proxy to be voted at the special meeting in the manner specified, you do not need to do anything further. If you have not previously submitted your proxy or if you wish to revoke your proxy or change your voting instructions, we urge you to complete, sign, date and promptly mail your proxy card or deliver your proxy via telephone or via the internet using the instructions on the proxy card and in the manner described in the proxy statement/prospectus. A proxy may be revoked in writing at any time before the special meeting in the manner described in the proxy statement/prospectus. If you hold your shares of Class V Common Stock through a bank, brokerage firm or other nominee, you should follow the instructions provided by such bank, brokerage firm or other nominee to ensure that your election instructions are timely returned.

The Company will use its reasonable efforts to cause an updated election form to be disseminated to persons who, as of the record date for the special meeting, are holders of record of shares of Class V Common Stock as soon as practicable following the filing of this supplement with the SEC. If you have previously submitted an election form, and you do not wish to change your election, you do not need to do anything further because the increase in the share consideration and the cash consideration pursuant to the merger agreement amendment will automatically apply to your election choices indicated in the prior election form. If you have not previously submitted an election form or if you wish to change your election, we urge you to return your properly completed and signed updated election form accompanied by the stock certificates for your shares of Class V Common Stock, if any, and any additional documents specified in the election form by the election deadline, in each case, in the manner described in the proxy statement/prospectus. We encourage you to return your election form as promptly as practicable. If you make a valid election (and do not subsequently validly revoke such election) prior to the election deadline, our exchange agent has advised that your shares of Class V Common Stock subject to such election may not be transferred after the election deadline and prior to the earlier of the closing or the termination of the Class V transaction. If you fail to make an election, you will receive solely shares of Class C Common Stock (other than cash received in lieu of a fractional share of Class C Common Stock).

The updated election form reflects the increases to the consideration for the Class V transaction, the increased maximum aggregate cash consideration and the new election deadline.

 

Q:

I previously submitted a gold proxy card sent to me by an Icahn stockholder and/or its affiliates. Will my vote be counted?

 

A:

No. On November 15, 2018, the Icahn stockholders filed (i) a Schedule 13D/A with the SEC, which amends their prior Schedule 13D filed with the SEC on October 15, 2018, and (ii) definitive additional materials to their definitive proxy statement filed with the SEC on October 15, 2018, in each case disclosing their intention to terminate their opposition to the Class V transaction and their solicitation of the Company’s stockholders to vote against all proposals in the proxy statement/prospectus. Advisors to Dell Technologies have been informed by advisors to the Icahn stockholders that the Icahn stockholders do not intend to vote any proxies submitted to them on the gold proxy card at the special meeting. As a result, if you have previously submitted a gold proxy card sent to you by any Icahn stockholder or its affiliates, your vote will not be counted. We urge you to submit a later dated white proxy card that was enclosed with the proxy statement/prospectus or the November stockholder notice by (i) accessing the internet website specified on

 

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  such proxy card, (ii) calling the toll-free number specified on such proxy card or (iii) marking, signing, dating and returning such proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the special meeting.

 

Q:

When must I make an election if I am a holder of Class V Common Stock?

 

A:

Our exchange agent, American Stock Transfer & Trust Company, LLC, must receive your properly completed election form and other required documents by 5:30 p.m., New York City time, on the eighth trading day following the date on which we issue a public announcement that the requisite stockholder approvals for the Class V transaction have been obtained, which we refer to as the election deadline.

 

Q:

Will I be able to transfer my shares of Class V Common Stock after the election deadline?

 

A:

If you make a valid election (and do not subsequently validly revoke such election) prior to the election deadline, our exchange agent has advised that your shares of Class V Common Stock subject to such election may not be transferred after the election deadline and prior to the earlier of the closing or the termination of the Class V transaction.

 

Q:

May I revoke or change my election after I mail my election form?

 

A:

Yes. Holders of Class V Common Stock may change their election at any time prior to the election deadline. At any time prior to the election deadline, holders may change or revoke their election one or more times by submitting written notice to the exchange agent accompanied by a properly completed and signed updated election form or by withdrawing the certificates representing shares of Class V Common Stock, or any documents in respect of book-entry shares representing Class V Common Stock, previously deposited with the exchange agent. See “Update to the Merger Agreement—Transaction Consideration and Elections.”

However, if you make a valid election (and do not subsequently validly revoke such election) prior to the election deadline, our exchange agent has advised that your shares of Class V Common Stock subject to such election may not be transferred after the election deadline and prior to the earlier of the closing or the termination of the Class V transaction.

 

Q:

Are there any important risks about the Class V transaction or the Company’s business of which I should be aware?

 

A:

Yes, there are important risks, contingencies and uncertainties involved. Before making any decision on how to vote, you are urged to read the section of the proxy statement/prospectus titled “Risk Factors” and the section of this supplement titled “Update to Risk Factors” carefully and in their entirety. You also should read and carefully consider the risk factors that are contained in the documents that are incorporated by reference into the proxy statement/prospectus and this supplement.

 

Q:

Has there been any change to the date or location of the special meeting of stockholders?

 

A:

No, the special meeting will still be held at the Dell Round Rock Campus, 501 Dell Way (Building 2-East), Round Rock, Texas 78682 on December 11, 2018, at 8:00 a.m., Central Time.

 

Q:

Who can help answer my questions?

 

A:

If you have additional questions about the Class V transaction, need assistance in submitting your proxy or election form or voting your shares of common stock, need additional copies of the proxy statement/prospectus or this supplement or have questions about the process for making an election, please contact Innisfree M&A Incorporated to assist you. Persons in the United States and Canada may call Innisfree toll-free at (877) 717-3936, persons outside the United States and Canada may call +1 (412) 232-3651 and banks, brokers and other financial institutions may call (212) 750-5833 (collect) to request additional documents and to ask any questions.

 

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UPDATE TO SUMMARY

The following information supplements and, where applicable, replaces the information under the heading “Summary” beginning on page 17 of the proxy statement/prospectus. We urge you to read this supplement and the proxy statement/prospectus carefully, including the attached annexes and the other documents incorporated by reference into the proxy statement/prospectus and this supplement. See “Where You Can Find More Information” for information on how you can obtain copies of the incorporated documents or view them via the internet.

Class V Transaction Overview

Credit Ratings

Although we expect to incur up to $5 billion of debt in connection with this transaction if holders of Class V Common Stock elect in the aggregate to receive more than $9 billion of cash, we remain focused on reducing our indebtedness to achieve and maintain corporate investment grade credit ratings in the long term. We do not expect a credit ratings downgrade related to the incurrence of such additional debt. We are committed to achieving corporate investment grade credit ratings and believe that our strong operating cash flows will enable us to achieve our goal.

Recent Developments

Investor Voting and Support Agreements

On November 14, 2018, the Company entered into Voting and Support Agreements, referred to herein as the Investor Voting and Support Agreements, with Elliott Associates L.P., Elliott International L.P., Dodge & Cox, Mason Capital Master Fund, LP and Canyon Capital Advisors, LLC, referred to herein as the publicly supporting stockholders. Subject to the terms and conditions set forth therein, each publicly supporting stockholder has agreed, among other things, to vote the shares of the Company’s capital stock over which it has voting power (i) in favor of the merger and the adoption of the amended merger agreement and each of the transactions contemplated thereby, including the adoption of the amended and restated Company certificate, and (ii) against any action that could reasonably be expected to impede, interfere with, delay, postpone or adversely affect the merger or the other transactions contemplated by the amended merger agreement in any material respect. The Investor Voting and Support Agreements also contain restrictions on the transfer of voting rights of the Company’s capital stock by the publicly supporting stockholders and the solicitation by the publicly supporting stockholders of holders of the Company’s capital stock to vote in opposition to the Class V transaction, in each case, until the earlier of (a) the consummation of the merger and (b) the date on which the amended merger agreement is terminated in accordance with its terms without the merger having occurred.

Stockholder Matters

On November 15, 2018, the Icahn stockholders filed (i) a Schedule 13D/A with the SEC, which amends their prior Schedule 13D filed with the SEC on October 15, 2018, and (ii) definitive additional materials to their definitive proxy statement filed with the SEC on October 15, 2018, in each case disclosing their intention to terminate their opposition to the Class V transaction and their solicitation of the Company’s stockholders to vote against all proposals in the proxy statement/prospectus and to withdraw the action they filed against the Company in the Delaware Chancery Court. This action against the Company was voluntarily dismissed by the plaintiffs on November 15, 2018.

On November 15, 2018, Dodge & Cox filed a Schedule 13D with the SEC, disclosing that Dodge & Cox has acquired in the aggregate approximately 8.0% of the outstanding Class V Common Stock and that it has entered into an Investor Voting and Support Agreement as described above under “—Investor Voting and Support Agreements.”



 

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Ownership and Corporate Structure

The following chart illustrates the legal ownership, economic interest and corporate structure with respect to the Company and VMware as of October 15, 2018 (1) prior to the Class V transaction and (2) on a pro forma basis after giving effect to the Class V transaction (assuming all holders of Class V Common Stock elect to receive shares of Class C Common Stock, and therefore that the minimum exchange ratio applies) as though it had been completed as of such date.

 

Current Structure

Prior to the Class V Transaction

  

Pro Forma Structure

Giving Effect to the Class V Transaction

 

LOGO

  

 

LOGO

 

(1)

Represents economic interest.

(2)

Represents voting power.

(3)

Represents the economic interest in the Class V Group that is attributable to the DHI Group. As of October 15, 2018, approximately 331 million shares of VMware common stock were held by the Class V Group, of which approximately 38.9% was attributable to the DHI Group.

(4)

As of October 15, 2018, the approximately 331 million shares of VMware common stock held by the Class V Group represented approximately 80.8% of the total outstanding VMware common stock. As indicated above, as of such date, approximately 38.9% of the Class V Group was attributable to the DHI Group and approximately 61.1% of the Class V Group was attributable to the holders of Class V Common Stock.

(5)

We have applied to list our shares of Class C Common Stock for trading on the NYSE upon the completion of the Class V transaction.

(6)

Assumes that all Class V stockholders elect to receive shares of Class C Common Stock and therefore that the applicable exchange ratio will be 1.5043 (which would represent the minimum exchange ratio) regardless of the DVMT Trading Price.

If (i) holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and (ii) the DVMT Trading Price is $104.55 or less, the applicable exchange ratio will be 1.8130 (which would represent the maximum exchange ratio), and therefore holders of Class A Common Stock, holders of Class B Common Stock and holders of Class C Common Stock would hold approximately 57.0% of the economic interest and 72.6% of the voting power, 19.1% of the economic interest and 24.3% of the voting power and 23.9% of the economic interest and 3.1% of the voting power, respectively, of the outstanding shares of our common stock.



 

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If (i) holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and (ii) the DVMT Trading Price is $120.00 or greater, the applicable exchange ratio will be 1.5043 (which would represent the minimum exchange ratio), and therefore holders of Class A Common Stock, holders of Class B Common Stock and holders of Class C Common Stock would hold approximately 59.1% of the economic interest and 73.0% of the voting power, 19.7% of the economic interest and 24.4% of the voting power and 21.2% of the economic interest and 2.6% of the voting power, respectively, of the outstanding shares of our common stock.



 

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Summary Historical and Pro Forma Financial and Other Data

The following tables present summary historical and unaudited pro forma condensed consolidated financial data for the Company as of the dates and for the periods indicated. The unaudited pro forma condensed consolidated statements of loss for the six months ended August 3, 2018 and the fiscal year ended February 2, 2018 give effect to the transactions contemplated by the amended merger agreement, the debt financing (to the extent cash elections for more than $9 billion are made) and the Class V transaction as if they had occurred on February 4, 2017, the first day of the fiscal year ended February 2, 2018. The unaudited pro forma condensed consolidated statement of financial position gives effect to the transactions contemplated by the amended merger agreement, the debt financing (to the extent cash elections for more than $9 billion are made) and the Class V transaction as if they had occurred on August 3, 2018. The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The summary unaudited pro forma condensed consolidated financial information is presented for informational purposes only. The summary unaudited pro forma condensed consolidated financial information does not purport to represent what the Company’s results of operations or financial condition would have been had the transactions contemplated by the amended merger agreement, the debt financing and the Class V transaction actually occurred on the dates indicated, and does not purport to project the Company’s results of operations or financial condition for any future period or as of any future date. See “Update to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

     Six Months Ended August 3, 2018  
     Historical     Pro Forma—
Maximum
Cash Election(a)
    Pro Forma—
No Cash
Election(b)
 
     (in millions, except per share amounts)  

Results of Operations Data:

      

Net loss

   $ (999   $ (1,175   $ (1,082

Net loss attributable to Dell Technologies Inc.

   $ (1,135   $ (1,295   $ (1,202

Pro forma earnings (loss) per share attributable to Dell Technologies Inc.—basic:

      

Class V Common Stock

   $ 3.97     $ —       $ —    

DHI Group (minimum exchange ratio)

   $ (3.39   $ (1.87   $ (1.38

DHI Group (maximum exchange ratio)

   $ (3.39   $ (1.80     N/A  

Pro forma earnings (loss) per share attributable to Dell Technologies Inc.—diluted:

      

Class V Common Stock

   $ 3.91     $ —       $ —    

DHI Group (minimum exchange ratio)

   $ (3.40   $ (1.90   $ (1.41

DHI Group (maximum exchange ratio)

   $ (3.40   $ (1.83     N/A  

Adjusted pro forma earnings (loss) per share attributable to Dell Technologies Inc.—basic(c):

      

Class V Common Stock

     $ —       $ —    

DHI Group (minimum exchange ratio)

     $ 2.88     $ 2.40  

DHI Group (maximum exchange ratio)

     $ 2.77       N/A  

Adjusted pro forma earnings (loss) per share attributable to Dell Technologies Inc.—diluted(c):

      

Class V Common Stock

     $ —       $ —    

DHI Group (minimum exchange ratio)

     $ 2.73     $ 2.30  

DHI Group (maximum exchange ratio)

     $ 2.64       N/A  

 

(a)

Assumes (i) the holders of Class V Common Stock make cash elections for $14 billion or more in the Class V transaction and that the minimum exchange ratio of 1.5043 is applied or (ii) the holders of Class V Common Stock make cash elections for $14 billion or more in the Class V transaction and that the maximum exchange ratio of 1.8130 is applied. If holders elect to receive $14 billion or more in cash in the



 

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  Class V transaction, the exchange ratio applied will have no impact on our results of operations data, other than with respect to pro forma earnings (loss) per share attributable to Dell Technologies, Inc. and adjusted pro forma earnings (loss) per share attributable to Dell Technologies Inc.
(b)

Assumes all holders of Class V Common Stock elect to receive shares of Class C Common Stock in the Class V transaction and therefore the minimum exchange ratio of 1.5043 applies regardless of the DVMT Trading Price.

(c)

Adjusted pro forma earnings (loss) per share amounts are only presented on pro forma amounts. See tables below for the adjusted pro forma numerator and denominator used in the computation of adjusted pro forma basic and diluted earnings (loss) per share. Adjusted pro forma earnings (loss) per share attributable to Dell Technologies Inc. is not a measurement of financial performance prepared in accordance with GAAP. See “About This Proxy Statement/Prospectus—Use of Non-GAAP Financial Measures” included in the proxy statement/prospectus for further discussion of the adjustments and information on the reasons why our management considers it useful to exclude certain items from our GAAP results, as well as limitations to the use of the non-GAAP financial measures presented in this supplement.

 

     As of August 3, 2018  
     Historical      Pro Forma—
Maximum
Cash
Election(a)
     Pro Forma—
No Cash
Election(b)
 
     (in millions, except per share amounts)  

Balance Sheet Data:

        

Cash and cash equivalents

   $ 15,312      $ 9,356      $ 18,356  

Short-term investments

   $ 2,504      $ —        $ —    

Total current assets

   $ 43,125      $ 34,665      $ 43,665  

Long-term investments

   $ 3,649      $ 1,026      $ 1,026  

Total assets

   $ 123,381      $ 112,298      $ 121,298  

Total liabilities

   $ 106,114      $ 111,114      $ 106,114  

Total stockholders’ equity

   $ 15,211      $ (872    $ 13,128  

 

(a)

Assumes the holders of Class V Common Stock make cash elections for $14 billion or more in the Class V transaction. In the event that holders of Class V Common Stock make cash elections in an aggregate amount of more than $9 billion but less than $14 billion, we expect to incur an amount of debt financing sufficient to fund the excess cash election amount over $9 billion.

(b)

Assumes all holders of Class V Common Stock elect to receive shares of Class C Common Stock in the Class V transaction. Under this scenario, we do not expect to incur any debt to finance the Class V transaction and plan to use remaining cash from the VMware special dividend (up to $9 billion) to repurchase shares of Class C Common Stock or pay down debt. The pro forma information presented above does not reflect any such use of cash, as it is not directly related to the Class V transaction.



 

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     Fiscal Year Ended February 2, 2018  
     Historical     Pro Forma—
Maximum
Cash
Election(a)
    Pro Forma—
No Cash
Election(b)
 
     (in millions, except per share amounts)  

Results of Operations Data:

      

Net loss

   $ (2,926   $ (3,157   $ (3,004

Net loss attributable to Dell Technologies Inc.

   $ (2,849   $ (3,065   $ (2,912

Pro forma earnings (loss) per share attributable to Dell Technologies Inc.—basic:

      

Class V Common Stock

   $ 1.63     $ —       $ —    

DHI Group (minimum exchange ratio)

   $ (5.61   $ (4.44   $ (3.36

DHI Group (maximum exchange ratio)

   $ (5.61   $ (4.27     N/A  

Pro forma earnings (loss) per share attributable to Dell Technologies Inc.—diluted:

      

Class V Common Stock

   $ 1.61     $ —       $ —    

DHI Group (minimum exchange ratio)

   $ (5.62   $ (4.45   $ (3.37

DHI Group (maximum exchange ratio)

   $ (5.62   $ (4.29     N/A  

Adjusted pro forma earnings (loss) per share attributable to Dell Technologies Inc.—basic(c):

      

Class V Common Stock

     $ —       $ —    

DHI Group (minimum exchange ratio)

     $ 5.41     $ 4.49  

DHI Group (maximum exchange ratio)

     $ 5.22       N/A  

Adjusted pro forma earnings (loss) per share attributable to Dell Technologies Inc.—diluted(c):

      

DHI Group (minimum exchange ratio)

     $ 5.25     $ 4.38  

DHI Group (maximum exchange ratio)

     $ 5.07       N/A  

 

(a)

Assumes (i) the holders of Class V Common Stock make cash elections for $14 billion or more in the Class V transaction and that the minimum exchange ratio of 1.5043 is applied or (ii) the holders of Class V Common Stock make cash elections for $14 billion or more in the Class V transaction and that the maximum exchange ratio of 1.8130 is applied. If holders elect to receive $14 billion or more in cash in the Class V transaction, the exchange ratio applied will have no impact on our results of operations data, other than with respect to pro forma earnings (loss) per share attributable to Dell Technologies, Inc. and adjusted pro forma earnings (loss) per share attributable to Dell Technologies Inc.

(b)

Assumes all holders of Class V Common Stock elect to receive shares of Class C Common Stock in the Class V transaction and therefore the minimum exchange ratio of 1.5043 applies regardless of the DVMT Trading Price.

(c)

Adjusted pro forma earnings (loss) per share amounts are only presented on pro forma amounts. See tables below for the adjusted pro forma numerator and denominator used in the computation of adjusted pro forma basic and diluted earnings (loss) per share. Adjusted pro forma earnings (loss) per share attributable to Dell Technologies Inc. is not a measurement of financial performance prepared in accordance with GAAP. See “About This Proxy Statement/Prospectus—Use of Non-GAAP Financial Measures” included in the proxy statement/prospectus for further discussion of the adjustments and information on the reasons why our management considers it useful to exclude certain items from our GAAP results, as well as limitations to the use of the non-GAAP financial measures presented in this supplement.



 

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The following table presents a reconciliation of pro forma net loss to adjusted pro forma net income attributable to Dell Technologies Inc. for each of the periods presented, assuming the holders of Class V Common Stock make cash elections for $14 billion or more in the Class V transaction.

 

     Six Months Ended
August 3, 2018
    Fiscal Year Ended
February 2, 2018
 
     (in millions)  

Pro forma net loss

   $ (1,175   $ (3,157

Less: Pro forma net income (loss) attributable to non-controlling interests

     120       (92
  

 

 

   

 

 

 

Pro forma net loss attributable to Dell Technologies Inc.

   $ (1,295   $ (3,065

Total Non-GAAP adjustments

     3,522       7,296  

Less: Total Non-GAAP adjustments attributable to non-controlling interests

     235       491  
  

 

 

   

 

 

 

Adjusted pro forma net income attributable to Dell Technologies Inc.

   $ 1,992     $ 3,740  
  

 

 

   

 

 

 

The following table presents a reconciliation of pro forma net loss to adjusted pro forma net income attributable to Dell Technologies Inc. for each of the periods presented, assuming all holders of Class V Common Stock elect to receive shares of Class C Common Stock in the Class V transaction.

 

     Six Months Ended
August 3, 2018
    Fiscal Year Ended
February 2, 2018
 
     (in millions)  

Pro forma net loss

   $ (1,082   $ (3,004

Less: Pro forma net income (loss) attributable to non-controlling interests

     120       (92
  

 

 

   

 

 

 

Pro forma net loss attributable to Dell Technologies Inc.

   $ (1,202   $ (2,912

Total Non-GAAP adjustments

     3,522       7,296  

Less: Total Non-GAAP adjustments attributable to non-controlling interests

     235       491  
  

 

 

   

 

 

 

Adjusted pro forma net income attributable to Dell Technologies Inc.

   $ 2,085     $ 3,893  
  

 

 

   

 

 

 


 

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The following table sets forth the adjusted pro forma numerator and denominator used in the computation of adjusted pro forma basic and diluted earnings (loss) per share for each of the periods presented:

 

     Six Months
Ended
August 3, 2018
    Fiscal Year
Ended
February 2, 2018
 
     (in millions)  

Adjusted Pro Forma Numerator: Adjusted Pro Forma Net Income Attributable to Dell Technologies Inc.

    

Adjusted pro forma net income—maximum cash election—basic

   $ 1,992     $ 3,740  

Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc.(a)

   $ (13   $ (27
  

 

 

   

 

 

 

Adjusted pro forma net income—maximum cash election—diluted

   $ 1,979     $ 3,713  
  

 

 

   

 

 

 

Adjusted Pro Forma Numerator: Adjusted Pro Forma Net Income Attributable to Dell Technologies Inc.

    

Adjusted pro forma net income—no cash election—basic

   $ 2,085     $ 3,893  

Incremental dilution from VMware, Inc. attributable to Dell Technologies Inc.(a)

   $ (13   $ (27
  

 

 

   

 

 

 

Adjusted pro forma net income—no cash election—diluted

   $ 2,072     $ 3,866  
  

 

 

   

 

 

 

Adjusted Pro Forma Denominator: Dell Technologies Inc. weighted-average shares outstanding—maximum cash election:

    

Weighted-average shares outstanding—historical—basic(b)

     568       567  

New shares of Class C Common Stock—basic (minimum exchange ratio)(c)

     124       124  
  

 

 

   

 

 

 

Weighted-average shares outstanding—basic (minimum exchange ratio)

     692       691  

Incremental dilution from stock incentive plans(d)

     33       16  
  

 

 

   

 

 

 

Weighted-average shares outstanding—diluted (minimum exchange ratio)

     725       707  
  

 

 

   

 

 

 

Weighted-average shares outstanding—basic (minimum exchange ratio)

     692       691  

Incremental new shares of Class C Common Stock—basic (maximum exchange ratio)(c)

     26       26  
  

 

 

   

 

 

 

Weighted-average shares outstanding—basic (maximum exchange ratio)

     718       717  

Incremental dilution from stock incentive plans(d)

     33       16  
  

 

 

   

 

 

 

Weighted-average shares outstanding—diluted (maximum exchange ratio)

     751       733  
  

 

 

   

 

 

 

Adjusted Pro Forma Denominator: Dell Technologies Inc. weighted-average shares outstanding—no cash election:

    

Weighted-average shares outstanding—historical—basic(b)

     568       567  

New shares of Class C Common Stock—basic(c)

     300       300  
  

 

 

   

 

 

 

Weighted-average shares outstanding—basic

     868       867  

Incremental dilution from stock incentive plans(d)

     33       16  
  

 

 

   

 

 

 

Weighted-average shares outstanding—diluted

     901       883  
  

 

 

   

 

 

 

 

(a)

The incremental dilution from VMware represents the impact of VMware’s dilutive securities on the diluted earnings (loss) per share of the Company’s common stock and is calculated by multiplying the difference between VMware’s basic and diluted earnings (loss) per share by the number of shares of VMware common stock held by the Company.

(b)

Reflects shares of Class A Common Stock, shares of Class B Common Stock and shares of Class C Common Stock that were outstanding before giving effect to the transactions contemplated by the amended merger agreement and the Class V transaction.



 

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(c)

See “Update to Unaudited Pro Forma Condensed Consolidated Financial Statements” for the calculation of the number of new shares of Class C Common Stock to be issued in the Class V transaction.

(d)

The incremental dilution from stock incentive plans represents the impact of the potentially dilutive securities outstanding during the period, as calculated using the treasury stock method.

Class V Transaction Summary

The Class V Transaction and the Merger Agreement (See pages S-56 and S-98)

The Class V Transaction (See pages S-56 and S-98)

Dell Technologies is offering the Class V stockholders the option to elect to receive for each share of Class V Common Stock either (1) such number of shares of our Class C Common Stock as determined by the application of the exchange ratio, which will be between 1.5043 and 1.8130 (as described below), or (2) $120.00 in cash, without interest, subject to proration. If a holder fails to properly elect which form of consideration to receive, such holder will be deemed to have made a share election and will receive solely shares of Class C Common Stock (other than cash received in lieu of a fractional share of Class C Common Stock).

In the event that all holders of Class V Common Stock make, or are deemed to have made, share elections to receive solely shares of Class C Common Stock by the election deadline, each share of Class V Common Stock will be exchanged at the minimum exchange ratio of 1.5043 shares of Class C Common Stock.

In the event that not all holders of Class V Common Stock make, or are deemed to have made, share elections by the election deadline, then the minimum exchange ratio will be increased by the exchange ratio adjustment, which amount will be a number of shares equal to (a) 0.01998 multiplied by (b) the lesser of (x) $15.45 and (y) the amount (which may be zero but, for the avoidance of doubt, not less than zero) by which the DVMT Trading Price is less than $120.00 multiplied by (c) the lesser of (x) 1.0 and (y) a fraction (i) the numerator of which is equal to the aggregate amount of cash elections as of the election deadline (without giving effect to any transfers of shares of Class V Common Stock which occur after the election deadline) and (ii) the denominator of which is equal to $14 billion, provided that the exchange ratio adjustment will not exceed 0.3087. In the event that the full amount of the exchange ratio adjustment is applicable, each share of Class V Common Stock will be exchanged at the maximum exchange ratio of 1.8130. The applicable exchange ratio generally will increase as the aggregate amount of cash elections increases and as the DVMT Trading Price decreases, subject to the maximum exchange ratio.

The DVMT Trading Price is the 17-day aggregate volume-weighted average price per share of Class V Common Stock on the NYSE (as reported on Bloomberg) for a period of 17 consecutive trading days ending on the date of the election deadline.

The following tables illustrate (i) the applicable exchange ratio based on hypothetical DVMT Trading Prices, assuming holders of Class V Common Stock elect in the aggregate to receive the cash consideration shown in the first column and (ii) the corresponding economic ownership in Dell Technologies that will be held by current holders of Class V Common Stock (on a fully-diluted basis). For additional information about the calculation of the exchange ratio, see “Update to Questions and Answers Regarding the Class V Transaction and the Special Meeting—Q: How will the applicable exchange ratio be calculated?” and “Update to the Merger Agreement—Transaction Consideration and Elections.”



 

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Exchange ratio:

 

Aggregate Cash Election Amount
(in billions)

   Illustrative DVMT Trading Price  
   $120.00      $118.00      $116.00      $114.00      $112.00      $110.00      $108.00      $106.00      $104.55  

$0.0

     1.5043        1.5043        1.5043        1.5043        1.5043        1.5043        1.5043        1.5043        1.5043  

$2.0

     1.5043        1.5100        1.5157        1.5214        1.5271        1.5328        1.5386        1.5443        1.5484  

$4.0

     1.5043        1.5157        1.5271        1.5386        1.5500        1.5614        1.5728        1.5842        1.5925  

$6.0

     1.5043        1.5214        1.5386        1.5557        1.5728        1.5899        1.6071        1.6242        1.6366  

$8.0

     1.5043        1.5271        1.5500        1.5728        1.5956        1.6185        1.6413        1.6641        1.6807  

$10.0

     1.5043        1.5328        1.5614        1.5899        1.6185        1.6470        1.6756        1.7041        1.7248  

$12.0

     1.5043        1.5386        1.5728        1.6071        1.6413        1.6756        1.7098        1.7441        1.7689  

$14.0

     1.5043        1.5443        1.5842        1.6242        1.6641        1.7041        1.7441        1.7840        1.8130  

Economic ownership percentage:

 

Aggregate Cash Election Amount
(in billions)

   Illustrative DVMT Trading Price  
   $120.00      $118.00      $116.00      $114.00      $112.00      $110.00      $108.00      $106.00      $104.55  

$0.0

     32.8%        32.8%        32.8%        32.8%        32.8%        32.8%        32.8%        32.8%        32.8%  

$2.0

     30.9%        31.0%        31.1%        31.1%        31.2%        31.3%        31.4%        31.5%        31.5%  

$4.0

     28.9%        29.1%        29.2%        29.4%        29.5%        29.7%        29.8%        30.0%        30.1%  

$6.0

     26.8%        27.0%        27.2%        27.4%        27.7%        27.9%        28.1%        28.3%        28.5%  

$8.0

     24.5%        24.8%        25.1%        25.3%        25.6%        25.9%        26.2%        26.4%        26.6%  

$10.0

     22.1%        22.4%        22.8%        23.1%        23.4%        23.7%        24.0%        24.3%        24.6%  

$12.0

     19.6%        19.9%        20.3%        20.6%        21.0%        21.3%        21.7%        22.0%        22.2%  

$14.0

     16.8%        17.2%        17.6%        17.9%        18.3%        18.7%        19.0%        19.4%        19.6%  

The table below illustrates the number of shares of Class C Common Stock to be issued, the total number of shares of our common stock that will be outstanding and the economic ownership percentage in the Company (on a fully-diluted basis) that will be held by current holders of Class V Common Stock, in each case, assuming that holders elect to receive $14 billion or more in cash:

 

     Illustrative DVMT Trading Price  
   $120.00      $118.00      $116.00      $114.00      $112.00      $110.00      $108.00      $106.00      $104.55  

Class C Shares Issued
(in millions)

     124.4        127.7        131.0        134.3        137.6        140.9        144.2        147.5        149.9  

Total Common Stock
(in millions)

     739.0        742.3        745.6        748.9        752.2        755.5        758.8        762.1        764.5  

Economic Ownership %

     16.8%        17.2%        17.6%        17.9%        18.3%        18.7%        19.0%        19.4%        19.6%  

Assuming all holders of Class V Common Stock elect to receive shares of Class C Common Stock in the Class V transaction, upon the completion of the Class V transaction, approximately 299.9 million shares of Class C Common Stock will be issued, the Company will have approximately 914.5 million shares of common stock in total outstanding and the economic ownership percentage in the Company (on a fully-diluted basis) that will be held by current holders of Class V Common Stock will be approximately 32.8%.

With respect to any share consideration received by holders, holders will receive not less than 1.5043 shares of Class C Common Stock for each share of Class V Common Stock that is exchanged pursuant to the Class V transaction.

In addition, the aggregate amount of cash consideration to be received by Class V stockholders in the Class V transaction may not exceed $14 billion. If holders of Class V Common Stock making cash elections elect



 

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in the aggregate to receive more than $14 billion in cash, such cash elections will be subject to proration, and a portion of the consideration such holders requested in cash will instead be received in the form of shares of Class C Common Stock. For additional information about proration, see “Update to Questions and Answers Regarding the Class V Transaction and the Special Meeting—Q: How will proration of a cash election be calculated under the amended merger agreement?,” “Update to the Merger Agreement—Transaction Consideration and Elections” and “Update to Election to Receive Class C Common Stock or Cash Consideration—Proration of Aggregate Cash Consideration.”

The Company expects to issue between approximately 299,892,120 shares of Class C Common Stock (if all holders of Class V Common Stock elect to receive shares of Class C Common Stock) and approximately 124,390,453 shares of Class C Common Stock (if the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and the exchange ratio is 1.5043). The Class C Common Stock will be entitled to one vote per share with respect to matters to be voted upon by the stockholders of the Company and will represent an interest in Dell Technologies’ entire business and, unlike the Class V Common Stock, will not track the performance of any distinct assets or business.

The Company has applied to list the Class C Common Stock on the NYSE under the symbol “DELL.” If the listing is approved, the shares of Class C Common Stock will begin trading following the completion of the Class V transaction. If the Class V transaction is completed, there will no longer be any outstanding shares of Class V Common Stock, which is currently listed on the NYSE under the ticker symbol “DVMT.”

The Amended Merger Agreement (See page S-98)

The Class V transaction will be implemented through the amended merger agreement, pursuant to which, upon the terms and subject to the conditions set forth therein, and in accordance with the DGCL, Merger Sub will merge with and into Dell Technologies at the effective time of the merger. As a result of the merger, the separate corporate existence of Merger Sub will cease and Dell Technologies will continue as the surviving corporation of the merger.

Upon the closing of the merger, each share of Class V Common Stock that is issued and outstanding immediately prior to the effective time of the merger will be cancelled and converted into the right to receive, at the holder’s election, (1) such number of shares of Class C Common Stock as determined by the application of the exchange ratio (which will be between 1.5043 and 1.8130) or (2) $120.00 in cash, without interest, subject to proration as described elsewhere in this supplement.

Copies of the merger agreement amendment and the form of the amended and restated Company certificate are attached as Annex S-A and Annex S-B, respectively, to this supplement, and a copy of the merger agreement is attached as Annex A to the proxy statement/prospectus. You are urged to read the merger agreement and the merger agreement amendment (including the form of the amended and restated Company certificate) in their entirety because they constitute the legal documents that govern the merger. For more information on the merger and the amended merger agreement, see “Update to Proposal 1—Adoption of the Merger Agreement” and “Update to the Merger Agreement.”

The Class V transaction will not be completed without the adoption of both the amended merger agreement and the amended and restated Company certificate by Dell Technologies stockholders. If the amended merger agreement and the amended and restated Company certificate are each adopted by our stockholders at the special meeting, we expect to complete the merger, pursuant to which the Class V transaction will be effected, promptly after the other conditions to the completion of the merger are satisfied or (to the extent legally permitted) waived in accordance with the amended merger agreement. As of the date of this supplement, we expect to complete the merger and the Class V transaction during the fourth quarter of calendar year 2018. For additional information



 

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about the conditions that must be satisfied (or to the extent legally permitted) waived in accordance with the amended merger agreement prior to the completion of the merger, see “Update to the Merger Agreement—Conditions to the Merger.”

Each share of Class A Common Stock, Class B Common Stock and Class C Common Stock that is issued and outstanding immediately prior to the effective time of the merger will remain unaffected by the merger and will continue to be an issued and outstanding shares of Class A Common Stock, Class B Common Stock or Class C Common Stock, respectively.

Recommendation of the Special Committee (See page S-69)

After consideration and consultation with its advisors, the Special Committee, which was established to act solely on behalf of, and solely in the interests of, the holders of Class V Common Stock, has unanimously determined that the merger in accordance with the terms of the amended merger agreement is advisable and in the best interest of the holders of Class V Common Stock, and has unanimously approved the amended merger agreement and transactions contemplated thereby, including the Class V transaction, the merger and the amended and restated Company certificate.

The Special Committee unanimously recommends that all holders of the Class V Common Stock entitled to vote thereon vote “FOR” the adoption of the amended merger agreement and “FOR” the adoption of the amended and restated Company certificate, which proposes certain changes to the corporate governance structure of the Company in connection with the Class V transaction. For the factors considered by the Special Committee in reaching this decision and a more detailed discussion of the recommendation, see “Proposal 1—Adoption of the Merger Agreement—Recommendation of the Special Committee” in the the proxy statement/prospectus and “Update to Proposal 1—Adoption of the Merger Agreement—Recommendation of the Special Committee” in this supplement.

Recommendation of the Board of Directors (See page S-75)

After consideration and consultation with its advisors, the Dell Technologies board of directors has unanimously determined that the merger in accordance with the terms of the amended merger agreement is advisable and in the best interests of the Company and its stockholders, and has unanimously approved the amended merger agreement and transactions contemplated thereby, including the Class V transaction, the merger and the amended and restated Company certificate.

The Dell Technologies board of directors unanimously recommends that all stockholders vote “FOR” the adoption of the amended merger agreement, “FOR” the adoption of the amended and restated Company certificate, which proposes certain changes to the corporate governance structure of the Company in connection with the Class V transaction, “FOR” the approval of the transaction-related compensation proposal and “FOR” the approval of the adjournment proposal. For the factors considered by the board of directors in reaching this decision and a more detailed discussion of the recommendation, see “Proposal 1—Adoption of the Merger Agreement—Recommendation of the Board of Directors” in the proxy statement/prospectus and “Update to Proposal 1—Adoption of the Merger Agreement—Recommendation of the Board of Directors” in this supplement.

Opinion of Evercore Group L.L.C. (See page S-78)

At a meeting of the Special Committee held on November 14, 2018, Evercore rendered its oral opinion to the Special Committee, which opinion was subsequently confirmed by delivery of a written opinion dated November 14, 2018, that, as of the date thereof, and based upon and subject to the factors, procedures,



 

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assumptions, qualifications, limitations and conditions set forth in its written opinion, the transaction consideration was fair, from a financial point of view, to the Class V stockholders (other than Dell Technologies and its affiliates).

The full text of Evercore’s written opinion, dated November 14, 2018, which sets forth, among other things, the factors considered, procedures followed, assumptions made and qualifications and limitations on the scope of review undertaken by Evercore in rendering its opinion, is attached as Annex S-D to this supplement and is incorporated by reference in its entirety. Evercore’s opinion was addressed to, and for the information and benefit of, the Special Committee in connection with its evaluation of the Class V transaction. Evercore’s opinion did not address the relative merits or timing of the Class V transaction as compared to other business or financial strategies that might be available to Dell Technologies or the Special Committee, nor did it address the underlying business decision of Dell Technologies or the Special Committee to engage in the Class V transaction or the price at which any shares of Dell Technologies, VMware or any other entity will trade at any time, including following the announcement or completion of the Class V transaction. Evercore’s opinion did not constitute a recommendation to the board of directors, the Special Committee or any other persons in respect of the Class V transaction, including as to how any Class V stockholder should vote or act in respect of the Class V transaction.

Conditions to the Merger (See page S-103)

The merger agreement amendment adds as conditions to the completion of the Class V transaction that (i) in the event that the aggregate cash consideration elected by holders of Class V Common Stock is equal to or greater than the $14 billion maximum aggregate cash consideration, the relevant Company subsidiaries will have received $5 billion of gross proceeds from debt financing (or, in the event that the aggregate cash consideration elected by holders of Class V Common Stock is greater than the $9 billion but less than $14 billion, the relevant Company subsidiaries will have received an amount of gross proceeds from debt financing equal to the aggregate cash consideration elected by holders of Class V Common Stock, less $9 billion), (ii) each Company subsidiary through which proceeds of such debt financing will pass in order to be received by the Company must have determined that such subsidiary meets all solvency and legal requirements to dividend, distribute, loan or otherwise transfer the proceeds of such debt financing or alternative financing that it will receive in accordance with the plan of distribution established by the Company and (iii) any transfers of Class V Common Stock following the election deadline but prior to the closing of the merger shall not have resulted in the aggregate number of shares of Class C Common Stock to be issued as share consideration exceeding the aggregate number of shares of Class C Common Stock registered pursuant to the Company’s Registration Statement on Form S-4.

Listing of Shares of Class C Common Stock and Delisting and Deregistration of Class V Common Stock (See page S-118)

The amended merger agreement requires that the Class C Common Stock be listed on the NYSE. Under the terms of the amended merger agreement, it is a condition to the completion of the merger that the shares of our Class C Common Stock be approved for listing on the NYSE, subject to official notice of issuance and our compliance with all applicable listing standards of the NYSE on the date on which such shares begin trading on the NYSE. See “Update to the Merger Agreement—Conditions to the Merger.” As previously disclosed, we have applied to list our shares of Class C Common Stock for trading on the NYSE upon the completion of the Class V transaction.

If the Class V transaction is completed, there will no longer be outstanding any shares of Class V Common Stock, which are currently listed on the NYSE under the ticker symbol “DVMT.” Accordingly, the Class V Common Stock will be delisted from the NYSE and will be deregistered under the Exchange Act. Our other series of common stock that will be outstanding after the Class V transaction, consisting of our Class A Common Stock and the Class B Common Stock, will not be publicly traded.



 

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The Amended Sponsor Stockholders Agreements (See page S-104)

The MD stockholders, the SLP stockholders and the Company will not enter into the Amended Sponsor Stockholders Agreement as described in the proxy statement/prospectus. Instead, the MD stockholders, the SLP stockholders and the Company have agreed that, effective upon the completion of the Class V transaction, the Sponsor Stockholders Agreement will be terminated, and the MD stockholders will enter into the MD Stockholders Agreement with the Company and the SLP stockholders will enter into the SLP Stockholders Agreement with the Company. Except as described below, the material terms of the Amended Sponsor Stockholders Agreement as described in the proxy statement/prospectus pertaining to the MD stockholders will be contained in the MD Stockholders Agreement and the material terms pertaining to the SLP stockholders will be contained in the SLP Stockholders Agreement. The SLP stockholders will not be parties to the MD Stockholders Agreement and the MD stockholders will be parties to the SLP Stockholders Agreement solely with respect to the specified provisions relating to tag-along rights and certain representations therein.

The SLP Stockholders Agreement will permit the SLP stockholders to terminate certain governance-related provisions of such agreement, including the director nomination and support obligations, in their sole discretion at any time at which they beneficially own less than 5% of the issued and outstanding shares of Class C Common Stock (after giving effect to the conversion of all shares of common stock owned by the SLP stockholders into Class C Common Stock). The MD Stockholders Agreement will permit the MD stockholders to terminate such agreement if the SLP Stockholders Agreement is terminated. The MD Stockholders Agreement also will require that any termination, amendments or waiver of certain of the Company’s rights thereunder will require the consent of each Group I Director. The SLP Stockholders Agreement will provide that, so long as the MD stockholders and the MSD Partners stockholders in the aggregate beneficially own common stock representing a majority of the total voting power of our outstanding common stock, the SLP stockholders will use their reasonable best efforts to expand the size of the board of directors to up to 21 directors at the request of the MD stockholders.

Investor Voting and Support Agreements (See page S-105)

On November 14, 2018, the Company entered into Investor Voting and Support Agreements with the publicly supporting stockholders. Subject to the terms and conditions set forth therein, each publicly supporting stockholder has agreed, among other things, to vote the shares of the Company’s capital stock over which it has voting power (i) in favor of the merger and the adoption of the amended merger agreement and each of the transactions contemplated thereby, including the adoption of the amended and restated Company certificate, and (ii) against any action that could reasonably be expected to impede, interfere with, delay, postpone or adversely affect the merger or the other transactions contemplated by the amended merger agreement in any material respect. The Investor Voting and Support Agreements also contain restrictions on the transfer of voting rights of the Company’s capital stock by the publicly supporting stockholders and the solicitation by the publicly supporting stockholders of holders of the Company’s capital stock to vote in opposition to the Class V transaction, in each case, until the earlier of (a) the consummation of the merger and (b) the date on which the amended merger agreement is terminated in accordance with its terms without the merger having occurred.

Accounting Treatment (See page S-94)

The merger and Class V transaction will be accounted for as a hybrid liability and equity transaction involving the repurchase of outstanding common stock, with the consideration consisting of a variable combination of cash and shares. Upon settlement, the accounting for the Class V transaction will reflect that the outstanding Class V Common Stock will be cancelled and converted into the right to receive shares of Class C Common Stock or $120.00 per share in cash or combination of cash and shares, dependent on each holder’s election and subject to proration of the aggregate cash consideration. The variable nature of the cash obligation to repurchase the shares of Class V Common Stock may require the Company to settle a portion of the shares in exchange for cash and therefore is accounted for as a financial instrument with a potential mark-to-market



 

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adjustment for the change in fair value from the date of the stockholder meeting to the election deadline. After the election deadline (following which the final proration and exchange ratio will be determined), the transaction will be accounted for as an equity transaction. See “Update to Proposal 1—Adoption of the Merger Agreement—Accounting Treatment.

Treatment of Equity Awards (See page S-94)

The increase to the exchange ratio under the amended merger agreement described in this supplement under “Update to the Merger Agreement—Transaction Consideration and Elections” also applies to the exchange ratio used to convert the Class V Common Stock-based equity awards. Therefore, all of the outstanding stock options, restricted stock units and deferred stock units covering shares of Class V Common Stock held by our independent directors at the time the Class V transaction is completed will be converted into similar awards covering shares of Class C Common Stock at the effective time of the merger at the same applicable exchange ratio, and not at the previous exchange ratio of 1.3665.

Interests of Certain Directors (See page S-93)

Any outstanding stock options, restricted stock units and deferred stock units covering shares of Class V Common Stock held by our independent directors at the time the Class V transaction is completed will be converted into similar awards covering shares of Class C Common Stock at the effective time of the merger at the applicable exchange ratio.

Litigation Relating to the Class V Transaction (See page S-97)

On October 31, 2018, High River Limited Partnership, Icahn Partners Master Fund LP, and Icahn Partners LP filed an action against us in Delaware Chancery Court, pursuant to Section 220 of the DGCL, seeking (i) to inspect certain of our books and records purportedly related to the Class V transaction or the potential initial public offering of our Class C Common Stock, and (ii) the public dissemination of unspecified materials already produced for inspection (High River LP v. Dell Techs. Inc., No. 2018-0790-AGB (Del. Ch. filed Oct. 31, 2018)). On November 5, 2018, the Chancery Court scheduled a trial on the matter for November 19, 2018. Prior to the scheduled trial, on November 15, 2018, the plaintiffs voluntarily dismissed this action against the Company.

On November 8, 2018, Hallandale Beach Police and Fire Retirement Plan filed a putative stockholder class action lawsuit against our directors and certain of the MD stockholders, the MSD Partners stockholders and the SLP stockholders in Delaware Chancery Court, alleging, among other things, that the directors of the Company breached their fiduciary duties to Class V stockholders in connection with the Class V transaction, because, among other things, the Class V transaction is allegedly financially unfair and coercive to Class V stockholders and there were various conflicts of interest (Hallandale Beach Police and Fire Retirement Plan v. Michael Dell, et al., No. 2018-0816-JTL (Del. Ch. filed November 8, 2018)). The lawsuit seeks, among other things, a judicial declaration that that defendants breached their fiduciary duties and an award of damages, fees and costs.

Additional lawsuits arising out of or relating to the merger agreement or the Class V transaction may be filed in the future.

Amended and Restated Company Certificate (See page S-106)

In connection with the Class V transaction, the Company’s stockholders are being asked to consider and vote on the adoption of the amended and restated Company certificate. If the amended and restated Company certificate is adopted by the stockholders (and certain other conditions are met, including adoption of the amended merger agreement by the stockholders), the existing Company certificate will be amended and restated as a result of the merger, in the form attached as Exhibit A to the merger agreement amendment that is attached



 

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as Annex S-A to this supplement, effective as of the effective time of the merger. Because the amended and restated Company certificate is part of the amended merger agreement, stockholder adoption of the amended and restated Company certificate is a condition to the completion of the merger and the Class V transaction.

The proposed amendments to the existing Company certificate are primarily intended to align aspects of the Company’s governance structure more closely with customary features of corporate governance for public companies and grant certain rights to the holders of Class C Common Stock. The amended and restated Company certificate will, among other things, (i) change the structure and size of our board of directors so that (a) the board will be divided into two classes consisting of the Group I Directors, who will be elected annually by the holders of the Class A Common Stock, Class B Common Stock and Class C Common Stock voting together as a single class, and, beginning with the second annual stockholders meeting of the Company after the completion of the Class V transaction, one Group IV Director, who will be elected annually by the holders of the Class C Common Stock, voting separately as a series, and (b) the maximum authorized number of directors will be increased from seven directors to 21 directors, (ii) terminate certain consent rights of the holders of Class A Common Stock, and (iii) remove or correct obsolete provisions and make other technical and administrative changes to the existing Company certificate.

In addition, the amended and restated Company certificate will provide that the number of Group I Directors will not be fewer than three nor more than 20 and will be determined in accordance with the amended and restated Company bylaws. The amended and restated Company bylaws, which may be amended by the board of directors in accordance therewith or by the stockholders in accordance with Section 109 of the DGCL, provide that the number of directors will be fixed by resolution of the board of directors and may be no fewer than three directors or more than 21 directors (provided that the number of Group IV Directors shall be one and the number of Group I Directors may be no fewer than three or more than 20 directors). Therefore, so long as the MD stockholders will continue to beneficially own common stock representing a majority of the total voting power of our outstanding common stock, the MD stockholders will have the ability to amend the bylaws, including provisions in the bylaws relating to the determination of board size, so long as such amendments are within the limits of the amended and restated Company certificate.

The form of the amended and restated Company certificate marked to reflect the proposed changes to the existing Company certificate is attached as Annex S-B to this supplement and the form of the amended and restated Company bylaws marked to reflect the proposed changes to the existing Company bylaws is attached as Annex S-C to this supplement. We encourage you to read both documents carefully.

If the amended and restated Company certificate is not adopted by the Company’s stockholders, then the closing conditions in the amended merger agreement will not be satisfied and the merger and the Class V transaction will not be completed.

Management of Dell Technologies After the Class V Transaction (See page S-45)

The business and affairs of Dell Technologies are managed under the direction of the Dell Technologies board of directors. Pursuant to the amended and restated Company certificate and the amended and restated Company bylaws, the Dell Technologies board of directors may consist of no fewer than three directors or more than 21 directors following the closing of the Class V transaction (provided that the number of Group IV Directors shall be one and the number of Group I Directors may be no fewer than three or more than 20). The number of authorized directors from time to time will be determined by the board of directors in accordance with the amended and restated Company bylaws. As of the record date for the special meeting, the board of directors is composed of six members, consisting of Michael S. Dell, David W. Dorman, Egon Durban, William D. Green, Ellen J. Kullman and Simon Patterson. Immediately after the Class V transaction, these individuals are currently expected to continue to serve as Group I directors.



 

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Under the amended and restated Company certificate, the board of directors will be divided into two classes of directors, consisting of the Group I Directors and the Group IV Director. The Group I Directors will be elected annually by the holders of the Class A Common Stock, Class B Common Stock and Class C Common Stock voting together as a single class, and, beginning with the second annual stockholders meeting of the Company after the completion of the Class V transaction and annually thereafter, the Group IV Director will be elected annually by the holders of the Class C Common Stock, voting separately as a series. Under the amended and restated Company certificate, each member of the board of directors will be entitled to one vote on any matter submitted to a vote of the board of directors. Based on their beneficial ownership of our common stock as of the record date, immediately following the completion of the Class V transaction, the MD stockholders will beneficially own common stock representing approximately 65.1% of the total voting power of our outstanding common stock (assuming all holders of Class V Common Stock elect to receive shares of Class C Common Stock, and therefore that the minimum exchange ratio applies), approximately 66.8% of the total voting power (assuming the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and the DVMT Trading Price is $104.55 or less, and therefore that the maximum exchange ratio applies) or approximately 67.1% of the total voting power (assuming the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and the DVMT Trading Price is $120.00 or greater, and therefore the minimum exchange ratio applies). For so long as the MD stockholders continue to beneficially own common stock representing a majority of the total voting power of our outstanding common stock, the MD stockholders will have the ability to approve any matter submitted to the vote of all of the outstanding shares of our common stock voting together as a single class, including the election of the Group I Directors.

Under the Amended Sponsor Stockholders Agreements, each of the MD stockholders and the SLP stockholders will have the right to nominate a number of individuals for election as directors which is equal to (i) in the case where the MD stockholders and SLP stockholders beneficially own more than 70% of the total voting power for the regular election of directors of the Company, the percentage of (x) the total voting power for the regular election of directors of the Company beneficially owned by the MD stockholders or by the SLP stockholders, as the case may be, multiplied by (y) the number of directors then on the board of directors (and any vacancy thereon) who are not members of the audit committee, or (ii) in the case where the MD stockholders and SLP stockholders beneficially own 70% or less of the total voting power for the regular election of directors of the Company, the percentage of (x) the total voting power for the regular election of directors of the Company beneficially owned by the MD stockholders or by the SLP stockholders, as the case may be, multiplied by (y) the number of directors then on the board of directors (and any vacancy thereon), in each case of (i) and (ii), rounded up to the nearest whole number. Further, so long as the MD stockholders or the SLP stockholders each beneficially own at least 5% of all outstanding shares of the Company’s common stock entitled to vote generally in the election of directors, each of the MD stockholders or the SLP stockholders, as applicable, will be entitled to nominate at least one individual for election to the board of directors as a Group I Director. Under the amended and restated Company certificate, the holders of Class C Common Stock will have the right, voting separately as a series, to elect the Group IV Director, beginning with the second annual meeting of stockholders following the completion of the Class V transaction and annually thereafter. The nominating and corporate governance committee referred to below will select or recommend to the board of directors for selection the Group IV Director nominee for election or re-election at each annual meeting of the stockholders. The SLP Stockholders Agreement also will provide that, so long as the MD stockholders and the MSD Partners stockholders in the aggregate beneficially own common stock representing a majority of the total voting power of our outstanding common stock, the SLP stockholders will use their reasonable best efforts to expand the size of the board of directors to up to 21 directors at the request of the MD Stockholders.

Under the MSD Partners Stockholders Agreement, the MSD Partners stockholders will be required to vote all of their common stock in favor of the election of each director who is included as part of the slate of directors set forth in any Company proxy statement and whose election the board of directors has recommended.



 

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As of the record date, after giving pro forma effect to the completion of the Class V transaction and assuming the board of directors was composed of six members, three of whom sit on the audit committee, the MD stockholders would have been entitled to nominate two individuals for election as Group I Directors and the SLP stockholders would have been entitled to nominate one individual for election as a Group I Director. Immediately following the completion of the Class V transaction, the MD stockholders intend to designate Michael Dell and Simon Patterson as their nominees and the SLP stockholders intend to designate Egon Durban as their nominee. The Company currently expects that each of its current directors will continue to serve on the board of directors following the completion of the Class V transaction. All of the current directors of the Company serve on the board of directors pursuant to the existing Sponsor Stockholders Agreement. Pursuant to the amended merger agreement, the board of directors of the Company will appoint a fourth director who meets the independence requirements of the NYSE to the board by no later than June 30, 2019 after consultation with holders of Class C Common Stock.

The Company is currently a “controlled company” under the rules of the NYSE and upon the completion of the Class V transaction will continue to be a “controlled company.” As a result, the Company qualifies for exemptions from, and has elected not to comply with, certain corporate governance requirements under NYSE rules, including the requirements that the Company have a board that is composed of a majority of “independent directors,” as defined under NYSE rules, and a compensation committee and a nominating and corporate governance committee that are composed entirely of independent directors. However, under the amended merger agreement, the Company has agreed that, no later than June 30, 2019, it will establish a nominating and corporate governance committee of the board of directors that will initially be comprised of Michael Dell (who will be the chairman of the nominating and corporate governance committee), Egon Durban and one director who meets the independence requirements of the NYSE. For additional information concerning the corporate governance exemptions for which the Company qualifies as a “controlled company” under the rules of the NYSE, see “Update to Management of Dell Technologies After the Class V Transaction—Board of Directors—Controlled Company Status.”

Capital Structure After the Class V Transaction (See page S-117)

Voting Rights (See page S-117)

Each holder of record of: (1) Class A Common Stock is entitled to 10 votes per share of Class A Common Stock; (2) Class B Common Stock is entitled to 10 votes per share of Class B Common Stock; (3) Class C Common Stock is entitled to one vote per share of Class C Common Stock; and (4) Class D Common Stock is not entitled to any vote on any matter except to the extent required by provisions of Delaware law (in which case such holder is entitled to one vote per share of Class D Common Stock), in the case of each of (1) through (4), which is outstanding in such holder’s name on the books of the Company and which is entitled to vote.

Following the completion of the Class V transaction, the board of directors will have a class consisting of the Group I Directors and, beginning with the second annual meeting following the closing of the Class V transaction, a class consisting of the Group IV Director. The holders of shares of all series of common stock outstanding will vote as one class with respect to the election of all Group I Directors and, beginning with the second annual meeting of stockholders of the Company following the completion of the Class V transaction and annually thereafter, the holders of Class C Common Stock will vote separately as a series with respect to the election of the Group IV Director. With respect to all other matters to be voted on by stockholders of the Company, the holders of shares of all series of common stock outstanding will vote as one class.

As of October 15, 2018, after giving pro forma effect to the completion of the Class V transaction, assuming all holders of Class V Common Stock elect to receive shares of Class C Common Stock, and therefore that the minimum exchange ratio applies, the number of votes to which holders of Class A Common Stock, holders of Class B Common Stock and holders of Class C Common Stock would be entitled would have represented



 

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approximately 70.8%, 23.7% and 5.5% of the total number of votes to which all holders of common stock would be entitled, respectively; assuming the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and the DVMT Trading Price is $104.55 or less, and therefore that the maximum exchange ratio applies, the number of votes to which holders of Class A Common Stock, holders of Class B Common Stock and holders of Class C Common Stock would be entitled would have represented approximately 72.6%, 24.3% and 3.1% of the total number of votes to which all holders of common stock would be entitled, respectively; and assuming the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and the DVMT Trading Price is $120.00 or greater, and therefore that the minimum exchange ratio applies, the number of votes to which holders of Class A Common Stock, holders of Class B Common Stock and holders of Class C Common Stock would be entitled would have represented approximately 73.0%, 24.4% and 2.6% of the total number of votes to which all holders of common stock would be entitled, respectively.

Financing of the Increased Maximum Aggregate Amount of Cash Consideration (See page S-94)

On November 14, 2018, Dell entered into a debt commitment letter with Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank PLC, Citigroup Global Markets Inc., Citibank, N.A., Citicorp USA, Inc., Citicorp North America, Inc., Credit Suisse AG, Cayman Islands Branch, Credit Suisse Loan Funding LLC, Goldman Sachs Bank, USA, JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc., Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc., Royal Bank of Canada, RBC Capital Markets, UBS AG, Stamford Branch, and UBS Securities LLC, providing for up to $5 billion in incremental debt financing under our senior secured credit facilities. The debt commitment letter contemplates that, in lieu of the incremental term loan facility, the Company or one or more of its subsidiaries may obtain alternate debt financing, the proceeds of which will reduce commitments in respect of the incremental term loan facility on a dollar-for-dollar basis. Upon satisfaction or (to the extent permitted by law) waiver of certain conditions, we expect such borrowings will be available on the funding date in an amount sufficient to fund the increase in the maximum aggregate amount of cash consideration. Such debt financing commitments will terminate upon the earlier of the termination of the merger agreement in accordance with its terms and February 7, 2019. See “Update to Proposal 1—Adoption of the Merger Agreement—Financing of the Increased Maximum Aggregate Amount of Cash Consideration.”



 

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UPDATE TO RISK FACTORS

The following risk factors are intended to address risks relating to the merger agreement amendment and the debt financing. These risk factors supplement and, where applicable, replace the risk factors described under the heading “Risk Factors” beginning on page 60 of the proxy statement/prospectus. In deciding whether to vote for the adoption of the amended merger agreement and the amended and restated Company certificate and for the approval of the other special meeting proposals, stockholders should carefully consider the following risk factors and the risk factors described under the heading “Risk Factors” in the proxy statement/prospectus, all of the information contained in this supplement and the proxy statement/prospectus and the information incorporated by reference into the proxy statement/prospectus and this supplement. See “Where You Can Find More Information” for information on how to obtain copies of the incorporated documents or view them via the internet.

Risks Relating to the Class V Transaction

Holders of Class V Common Stock may not receive as much cash in the Class V transaction as they have elected.

The amended merger agreement provides that no more than $14 billion of cash, in the aggregate, will be paid to holders of Class V Common Stock in connection with the Class V transaction. If holders of Class V Common Stock making cash elections elect in the aggregate to receive more than $14 billion in cash, such cash elections will be subject to proration, and a portion of the consideration such holders requested in cash will instead be received in the form of Class C Common Stock. For additional information about proration, see “Update to Election to Receive Class C Common Stock or Cash ConsiderationProration of Aggregate Cash Consideration.” The value of the shares of Class C Common Stock at the time of the closing of the Class V transaction that are received by holders whose cash elections are prorated may be lower than the value of the cash consideration that such holders otherwise would have received in the absence of such proration.

The prices at which Class C Common Stock will trade after the Class V transaction may differ from the value used to determine the exchange ratio in the Class V transaction.

The valuation of Dell Technologies and the exchange ratio of 1.5043 shares of Class C Common Stock for each share of Class V Common Stock (as it may be increased up to the maximum exchange ratio of 1.8130 shares of Class C Common Stock as described herein) were based on the analysis of each of Dell Technologies and the Special Committee and their related negotiations with respect thereto, with Goldman Sachs acting as financial advisor to Dell Technologies and Evercore acting as financial advisor to the Special Committee, as well as negotiations with certain Class V stockholders. It is not possible to predict the prices at which the Class C Common Stock will trade after the Class V transaction relative to the trading prices of shares of Class V Common Stock before the Class V transaction or the trading prices of shares of VMware Class A common stock. In particular, the Company’s ongoing efforts to solicit proxies in support of the Class V transaction and to encourage long-term investment in the Company could increase the trading price of the Class V Common Stock, which will in part affect the exchange ratio. Trading prices of the Class C Common Stock may be less than the valuation of Dell Technologies that was used to determine the exchange ratio in the Class V transaction. In addition, the actual and perceived market value of the Class C Common Stock to be received at the closing of the Class V transaction may be higher or lower than the actual and perceived value of those shares on earlier dates.

Because the applicable exchange ratio is based, in part, on the trading price of Class V Common Stock and because there is no current trading market for the Class C Common Stock, the value of the Class C Common Stock that holders of Class V Common Stock will receive in the Class V transaction is uncertain.

The applicable exchange ratio at which shares of Class V Common Stock will be exchanged for shares of Class C Common Stock will be based, in part, on the DVMT Trading Price. Because there is no current trading market for, or market price of, the Class C Common Stock, the applicable exchange ratio will not reflect any

 

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trading price of the Class C Common Stock. As a result, the value of the Class C Common Stock to be received by holders of Class V Common Stock as part of the transaction consideration is uncertain. Although we have applied to list our Class C Common Stock on the NYSE, market reaction to newly listed stocks is unpredictable. The opening price of the Class C Common Stock upon listing on the NYSE and its trading price thereafter will depend on various factors, including, among others, the factors identified in the proxy statement/prospectus under “—Risks Relating to Ownership of Class C Common StockThe price of our Class C Common Stock may be volatile, which could cause the value of your investment to decline.” Many of these factors are not within our control. We cannot assure you that the Class C Common Stock will trade at any particular price.

Whether holders of Class V Common Stock will receive more than 1.5043 shares of Class C Common Stock in exchange for each share of their Class V Common Stock will not be determined at the time the holders of Class V Common Stock make their elections.

Upon the completion of the Class V transaction, each share of Class V Common Stock will be converted into the right to receive, at the election of the holder of such share, either (1) such number of shares of Class C Common Stock as determined by the application of the exchange ratio (which will be between 1.5043 and 1.8130) or (2) $120.00 in cash, without interest, subject to a cap of $14 billion on the aggregate amount of cash consideration. The applicable exchange ratio will be determined by the amount of cash elections as of the election deadline as well as the DVMT Trading Price. The applicable exchange ratio generally will increase as the aggregate amount of cash elections increases and as the DVMT Trading Price decreases, subject to a maximum exchange ratio of 1.8130. With respect to any share consideration received by holders, holders will receive not less than 1.5043 shares of Class C Common Stock for each share of Class V Common Stock that is exchanged pursuant to the Class V transaction.

Because the exchange ratio is dependent upon the aggregate amount of cash elections made by holders of Class V Common Stock and the DVMT Trading Price, each of which will not be known by the election deadline, holders of Class V Common Stock will not know the applicable exchange ratio at the time they make their election. While the Company expects to make publicly available on its website each day unofficial estimates of the aggregate amount of cash elections and share elections as of 5:30 p.m., New York City time, on the trading day prior to such publication that are based on preliminary reports from the exchange agent, beginning on the eighth trading day prior to the date of the special meeting of stockholders, such preliminary estimates may be significantly higher or lower than the final exchange ratio, which can be determined only after the election deadline. Holders should exercise caution in relying on these numbers, since they may not reflect the elections of large Class V stockholders whose elections may not be made until late in the process, and whose elections may significantly impact the aggregate amount of cash elections and share elections and thereby, the final exchange ratio. In addition, the trading price of the Class V Common Stock at and prior to the election deadline may be materially higher or lower than the DVMT Trading Price. Therefore, the amount of Class C Common Stock that a holder of Class V Common Stock receives at the closing of the Class V transaction based on the final exchange ratio may be materially different from the amount of Class C Common Stock such holder would have expected to receive when the holder made the election.

The completion of the Class V transaction is subject to a number of conditions, which, if not fulfilled or not fulfilled in a timely manner, may result in termination of the amended merger agreement and abandonment of the Class V transaction.

In addition to VMware’s payment of the special cash dividend and the ability of the Company’s subsidiaries to transfer the proceeds of such payment to the Company, the amended merger agreement contains a number of conditions to our obligation to complete the merger, including, among others:

 

   

adoption by our stockholders (including the holders of Class V Common Stock) of the amended merger agreement and the amended and restated Company certificate, which is part of the amended merger agreement;

 

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the approval of the Class C Common Stock for listing on the NYSE, subject to official notice of issuance and our compliance with all applicable listing standards of the NYSE on the date on which such shares begin trading on the NYSE;

 

   

the absence of any law, order or injunction of a court or governmental entity of competent jurisdiction that prohibits or makes illegal the consummation of the merger;

 

   

the absence of a material adverse effect (as defined in the amended merger agreement) with respect to both Dell Technologies and VMware since February 2, 2018;

 

   

the receipt of an aggregate amount of $5 billion of gross proceeds from the debt financing (or, if holders of Class V Common Stock elect in the aggregate to receive more than $9 billion but less than $14 billion in cash, such other amount that is sufficient to pay the aggregate amount of cash consideration elected by holders of Class V Common Stock, less $9 billion);

 

   

each Company subsidiary through which proceeds of such debt financing will pass in order to be received by the Company must have determined that such subsidiary meets all solvency and legal requirements to dividend, distribute, loan or otherwise transfer the proceeds of such debt financing or alternative financing that it will receive in accordance with the plan of distribution established by the Company; and

 

   

any transfers of Class V Common Stock following the election deadline but prior to the closing of the merger shall not have resulted in the aggregate number of shares of Class C Common Stock to be issued as share consideration exceeding the aggregate number of shares of Class C Common Stock registered pursuant to the Company’s Registration Statement on Form S-4.

For a more complete summary of the conditions that must be satisfied or waived prior to the completion of the Class V transaction, see “Update to the Merger Agreement—Conditions to the Merger.”

Many of the conditions to the closing of the merger and the Class V transaction are not within our control, and we are unable to predict when or if these conditions will be satisfied. The amended merger agreement provides for an outside date of January 31, 2019 for the completion of the merger, after which we may terminate the amended merger agreement. Although we have agreed in the amended merger agreement to use our reasonable best efforts, subject to certain limitations, to complete the merger as promptly as practicable, these and other conditions to the completion of the merger and Class V transaction may fail to be satisfied. In addition, satisfying the conditions to and completing the merger and Class V transaction may take longer, and could cost more, than we expect.

Lawsuits have been filed and other lawsuits may be filed arising out of or relating to the merger agreement or the Class V transaction. An adverse ruling in any such lawsuit may delay the Class V transaction or prevent the Class V transaction from being completed.

On October 31, 2018, High River Limited Partnership, Icahn Partners Master Fund LP, and Icahn Partners LP filed an action against us in Delaware Chancery Court, pursuant to Section 220 of the DGCL, seeking (i) to inspect certain of our books and records purportedly related to the Class V transaction or the potential initial public offering of our Class C Common Stock, and (ii) the public dissemination of unspecified materials already produced for inspection (High River LP v. Dell Techs. Inc., No. 2018-0790-AGB (Del. Ch. filed Oct. 31, 2018)). On November 5, 2018, the Chancery Court scheduled a trial on the matter for November 19, 2018. Prior to the scheduled trial, on November 15, 2018, the plaintiffs voluntarily dismissed this action against the Company.

On November 8, 2018, Hallandale Beach Police and Fire Retirement Plan filed a putative stockholder class action lawsuit against our directors and certain of the MD stockholders, the MSD Partners stockholders and the SLP stockholders in Delaware Chancery Court, alleging, among other things, that the directors of the Company breached their fiduciary duties to Class V stockholders in connection with the Class V transaction, because,

 

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among other things, the Class V transaction is allegedly financially unfair and coercive to Class V stockholders and there were various conflicts of interest (Hallandale Beach Police and Fire Retirement Plan v. Michael Dell, et al., No. 2018-0816-JTL (Del. Ch. filed November 8, 2018)). The lawsuit seeks, among other things, a judicial declaration that that defendants breached their fiduciary duties and an award of damages, fees and costs. See the section “Update to Proposal 1—Adoption of the Merger AgreementLitigation Relating to the Class V Transaction” for more information about the lawsuit related to the Class V transaction that has been filed prior to the date of this supplement.

Additional lawsuits arising out of or relating to the merger agreement or the Class V transaction may be filed in the future. Such lawsuits could prevent the Class V transaction from being completed, or could result in a material delay in, or the abandonment of, the Class V transaction. One of the conditions to the completion of the merger is the absence of any applicable law (including any restraining order, injunction, or other judgment, order or decree) being in effect in the United States or certain other jurisdictions where we have material business or operations that prohibits the consummation of the merger. Accordingly, if a plaintiff in any such jurisdiction is successful in obtaining an order that prohibits the consummation of the merger, then such order may prevent the merger and the Class V transaction from being completed, or from being completed within the expected timeframe.

The fairness opinion obtained by the Special Committee from its financial advisor will not reflect changes, circumstances, developments or events that may have occurred or may occur after the date of the opinion.

The Special Committee obtained from its financial advisor, Evercore, an updated opinion that the revised transaction consideration was fair, from a financial point of view, to the Class V stockholders (other than Dell Technologies and its affiliates) that was rendered on November 14, 2018, the date on which the merger agreement amendment was entered into. The opinion of Evercore does not speak as of the time at which the merger or the Class V transaction will be completed or as of any date other than the date of the opinion. Changes in financial, economic, market and other conditions on which the opinion of Evercore was based may significantly alter the values of Dell Technologies or the Class V Common Stock prior to the completion of the merger or the Class V transaction.

The opinion of Evercore is attached as Annex S-D to this supplement. For a description of the opinion that the Special Committee received from Evercore and a summary of the material financial analyses they provided to the Special Committee in connection with rendering such opinion, see “Update to Proposal 1—Adoption of the Merger Agreement—Opinion of Evercore Group L.L.C.

Risks Relating to Ownership of Class C Common Stock

Our multi-class common stock structure with different voting rights may adversely affect the trading price of the Class C Common Stock.

Each share of our Class A Common Stock and each share of our Class B Common Stock has ten votes, while each share of our Class C Common Stock has one vote. Based on their ownership of our common stock as of October 15, 2018, because of these disparate voting rights, immediately following the completion of the Class V transaction, the MD stockholders, the MSD Partners stockholders and the SLP stockholders will collectively hold common stock representing approximately 93.9% of the total voting power of our outstanding common stock (assuming all holders of Class V Common Stock elect to receive shares of Class C Common Stock, and therefore that the minimum exchange ratio applies), approximately 96.4% of the total voting power of our outstanding common stock (assuming the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and the DVMT Trading Price is $104.55 or less, and therefore that the maximum exchange ratio applies) or approximately 96.8% of the total voting power (assuming the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and the DVMT Trading Price is $120.00 or greater, and therefore that the minimum exchange ratio applies). The limited ability of holders of our Class C Common Stock to influence matters requiring stockholder approval may adversely affect the market price of our Class C Common Stock.

 

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In addition, in 2017, FTSE Russell, S&P Dow Jones and MSCI announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices to exclude companies with multiple classes of shares of common stock from being added to such indices. FTSE Russell announced plans to require new, and beginning in September 2022, existing constituents of its indices to have at least 5% of their voting rights in the hands of public stockholders, whereas S&P Dow Jones announced that companies with multiple share classes, such as ours, will not be eligible for inclusion in the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. MSCI also opened public consultations on their treatment of no-vote and multi-class structures and has temporarily barred new multi-class listings from its ACWI Investable Market Index and U.S. Investable Market 2500 Index. Other stock indices might take a similar approach in the future. Under the announced policies, our multi-class capital structure would make us ineligible for inclusion in any of these indices and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track these indices will not invest in our Class C Common Stock. These policies are new and it is unclear what effect, if any, they will have on the valuations of publicly traded companies excluded from the indices. It is possible that such policies may depress the valuations of public companies excluded from these indices compared to valuations of companies that are included.

Future sales, or the perception of future sales, of a substantial amount of shares of our Class C Common Stock could depress the trading price of the Class C Common Stock.

Sales of a substantial number of shares of our Class C Common Stock in the public market, or the perception that these sales may occur, could adversely affect the market price of the Class C Common Stock, which could make it more difficult for investors to sell their shares of Class C Common Stock at a time and price that they consider appropriate. These sales, or the possibility that these sales may occur, also could impair our ability to sell equity securities in the future at a time and at a price we deem appropriate, and our ability to use Class C Common Stock as consideration for acquisitions of other businesses, investments or other corporate purposes. Immediately following the completion of the Class V transaction, we will have a total of approximately 322,381,570 shares of our Class C Common Stock outstanding (assuming all holders of Class V Common Stock elect to receive shares of Class C Common Stock and therefore that the minimum exchange ratio applies), approximately 172,406,282 shares of our Class C Common Stock outstanding (assuming the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and the DVMT Trading Price is $104.55 or less, and therefore that the maximum exchange ratio applies) or approximately 146,879,903 shares of our Class C Common Stock outstanding (assuming the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and the DVMT Trading Price is $120.00 or greater, and therefore that the minimum exchange ratio applies).

As of October 15, 2018, the 406,290,710 outstanding shares of Class A Common Stock held by the MD stockholders and the MSD Partners stockholders and the 136,986,858 outstanding shares of Class B Common Stock held by the SLP stockholders are convertible into shares of Class C Common Stock at any time on a one-to-one basis. Although the MD stockholders, the MSD Partners stockholders and SLP stockholders are generally subject to transfer restrictions that prevent their sale or other transfer of common stock for 180 days following the completion of the Class V transaction, upon the expiration or waiver of such lock-up period, such shares, upon any conversion into shares of Class C Common Stock, will be eligible for resale in the public market pursuant to Rule 144 under the Securities Act, subject to volume, manner of sale and other limitations under Rule 144.

In addition, as of October 15, 2018, we have entered into a registration rights agreement with holders of 406,483,978 outstanding shares of Class A Common Stock (which are convertible into shares of Class C Common Stock), holders of all of the 136,986,858 outstanding shares of Class B Common Stock (which are convertible into shares of Class C Common Stock) and holders of 22,468,918 outstanding shares of Class C Common Stock, pursuant to which we have granted such holders and their permitted transferees shelf, demand and/or piggyback registration rights with respect to such shares. Registration of those shares under the Securities Act would permit such holders to sell the shares into the public market.

 

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Further, as of October 15, 2018 and after giving pro forma effect to the conversion of stock options, restricted stock units and deferred units covering shares of Class V Common Stock into similar awards covering shares of Class C Common Stock upon the completion of the Class V transaction, we would have had (i) (a) 34,625,572 shares of Class C Common Stock (assuming the minimum exchange ratio applies) or (b) 34,666,644 shares of Class C Common Stock (assuming the maximum exchange ratio applies) that may be issued upon the exercise, vesting or settlement, as applicable, of outstanding stock options, restricted stock units or deferred stock units under our stock incentive plans, all of which would have been, upon issuance, eligible for sale in the public market, subject to expiration or waiver of applicable contractual transfer restrictions that, subject to certain exceptions, are scheduled to expire beginning 181 days after the completion of the Class V transaction, and to terminate 18 months thereafter, and (ii) an additional 32,109,884 shares of Class C Common Stock that have been authorized and reserved for issuance in relation to potential future awards under our stock incentive plans. We also may issue additional options in the future which may be exercised for additional shares of Class C Common Stock and additional restricted stock units or deferred stock units which may vest, all of which we expect will be registered under one or more registration statements on Form S-8 under the Securities Act and available for sale in the open market.

Dell Technologies is controlled by the MD stockholders, and the MD stockholders, the MSD Partners stockholders and the SLP stockholders collectively own a substantial majority of its common stock.

By reason of their ownership of Class A Common Stock possessing a majority of the aggregate votes entitled to be cast by holders of all outstanding shares of the Company’s common stock voting together as a single class, the MD stockholders have the ability to approve any matter submitted to the vote of all of the outstanding shares of the Company’s common stock voting together as a single class.

Through their control of Dell Technologies, the MD stockholders are, and after the completion of the Class V transaction will be, able to control actions to be taken by Dell Technologies, including actions related to the election of directors of Dell Technologies and its subsidiaries (including VMware and its subsidiaries), amendments to Dell Technologies’ organizational documents and the approval of significant corporate transactions, including mergers, sales of substantially all of Dell Technologies’ assets, distributions of Dell Technologies’ assets, the incurrence of indebtedness and any incurrence of liens on Dell Technologies’ assets. For example, while the amended and restated Company bylaws provide that the number of directors will be fixed by resolution of the board of directors, the stockholders of the Company may adopt, amend or repeal the amended and restated Company bylaws in accordance with Section 109 of the DGCL. Through their control of Dell Technologies, the MD stockholders may therefore amend the amended and restated Company bylaws to change the number of directors (within the limits of the amended and restated Company certificate), notwithstanding any determination by the board of directors regarding board size.

Further, as of October 15, 2018, after giving pro forma effect to the completion of the Class V transaction, the MD stockholders, the MSD Partners stockholders and the SLP stockholders will collectively beneficially own 63.0% (assuming all holders of Class V Common Stock elect to receive shares of Class C Common Stock, and therefore that the minimum exchange ratio applies), 76.0% (assuming the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and the DVMT Trading Price is $104.55 or less, and therefore that the maximum exchange ratio applies) or 78.8% (assuming the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and the DVMT Trading Price is $120.00 or greater, and therefore that the minimum exchange ratio applies) of our outstanding common stock. This concentration of ownership together with the disparate voting rights of our common stock may delay or deter possible changes in control of the Company, which may reduce the value of an investment in our Class C Common Stock. So long as the MD stockholders, the MSD Partners stockholders and the SLP stockholders continue to own common stock representing a significant amount of the combined voting power of our outstanding common stock, even if such amount is, individually or in the aggregate, less than 50%, such stockholders will continue to be able to strongly influence our decisions. Further, after the completion of the Class V transaction, the MD stockholders and the SLP stockholders, respectively, will have the right to nominate a number of individuals for election as Group I

 

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Directors which is equal to the percentage of the total voting power for the regular election of directors of the Company beneficially owned by the MD stockholders or by the SLP stockholders, as the case may be, multiplied by the number of directors then on the board of directors who are not members of the audit committee, rounded up to the nearest whole number. Further, so long as the MD stockholders or the SLP stockholders each beneficially own at least 5% of all outstanding shares of the Company’s common stock entitled to vote generally in the election of directors, each of the MD stockholders or the SLP stockholders, as applicable, will be entitled to nominate at least one individual for election as a Group I Director.

Risks Relating to our Business and our Industry

Dell Technologies’ substantial level of indebtedness could adversely affect its financial condition.

Dell Technologies has a substantial amount of indebtedness, which require significant interest and other debt service payments. As of August 3, 2018, after giving effect to the incurrence of the debt financing in the maximum principal amount of $5.0 billion, Dell Technologies would have had approximately $55.3 billion aggregate principal amount of indebtedness (assuming the holders elect in the aggregate to receive $14 billion or more in cash). As of the same date, Dell Technologies and its subsidiaries also had an additional $4.9 billion available for borrowing under its revolving credit facilities.

Dell Technologies’ substantial level of indebtedness could have important consequences, including the following:

 

   

Dell Technologies must use a substantial portion of its cash flow from operations to pay interest and principal on its senior credit facilities, its senior secured and senior unsecured notes, and its other indebtedness, which reduces funds available to Dell Technologies for other purposes such as working capital, capital expenditures, other general corporate purposes and potential acquisitions;

 

   

Dell Technologies’ ability to refinance such indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions or other general corporate purposes may be impaired;

 

   

Dell Technologies is exposed to fluctuations in interest rates because Dell Technologies’ senior credit facilities have variable rates of interest;

 

   

Dell Technologies’ leverage may be greater than that of some of its competitors, which may put Dell Technologies at a competitive disadvantage and reduce Dell Technologies’ flexibility in responding to current and changing industry and financial market conditions; and

 

   

Dell Technologies may be unable to comply with financial and other restrictive covenants in its senior credit facilities, the notes, and other indebtedness that limit Dell Technologies’ ability to incur additional debt, make investments and sell assets, which could result in an event of default that, if not cured or waived, would have an adverse effect on Dell Technologies’ business and prospects and could force it into bankruptcy or liquidation.

Dell Technologies and its subsidiaries may be able to incur substantial additional indebtedness in the future, subject to the restrictions contained in Dell Technologies’ and its subsidiaries’ credit facilities and the indentures that govern the notes. If new indebtedness is added to the debt levels of Dell Technologies and its subsidiaries, the related risks that Dell Technologies now faces could intensify. Dell Technologies’ ability to access additional funding under its revolving credit facilities will depend upon, among other factors, the absence of a default under either such facility, including any default arising from a failure to comply with the related covenants. If Dell Technologies is unable to comply with its covenants under its revolving credit facilities, Dell Technologies’ liquidity may be adversely affected.

From time to time, when it believes it is advantageous to do so, Dell Technologies may seek to reduce its leverage by repaying certain of its indebtedness before the maturity dates of such indebtedness. Dell Technologies may be unable to generate operating cash flows and other cash necessary to achieve a level of debt reduction that will significantly enhance its credit quality and reduce the risks associated with its substantial indebtedness.

 

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As of February 2, 2018, approximately $12.6 billion of Dell Technologies’ debt was variable-rate debt and a 100 basis point increase in interest rates would have resulted in an increase of approximately $126 million in annual interest expense on such debt. Dell Technologies’ ability to meet its expenses, to remain in compliance with its covenants under its debt instruments and to make future principal and interest payments in respect of its debt depends on, among other factors, Dell Technologies’ operating performance, competitive developments and financial market conditions, all of which are significantly affected by financial, business, economic, and other factors. Dell Technologies is not able to control many of these factors. Given current industry and economic conditions, Dell Technologies’ cash flow may not be sufficient to allow Dell Technologies to pay principal and interest on its debt and meet its other obligations.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements in this supplement or the proxy statement/prospectus that are not historical in nature are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this supplement, the proxy statement/prospectus or in documents incorporated by reference into the proxy statement/prospectus or this supplement, forward-looking statements include, without limitation, statements regarding financial estimates, completion of the merger and effects of the Class V transaction, the debt financing, future financial and operating results, the Company’s plans, expectations, beliefs, intentions and strategies, and other statements that are not historical facts. Such forward-looking statements may be signified by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should” and similar expressions.

These statements regarding future events or the Company’s future performance or results inherently are subject to a variety of risks, contingencies and other uncertainties that could cause actual results, performance or achievements to differ materially from those described in or implied by the forward-looking statements. The risks, contingencies and other uncertainties that could result in the failure of the Class V transaction to be completed or, if completed, that could affect ownership of the Class C Common Stock or the Company’s business, results of operations, financial condition or prospects include:

 

   

the uncertain value of the Class C Common Stock issuable in the Class V transaction;

 

   

the inability to determine the final exchange ratio at the time that cash and share elections are made;

 

   

the uncertainty of the prices at which the Class C Common Stock will trade after the Class V transaction compared to the value used to determine the exchange ratio in the Class V transaction;

 

   

the failure of VMware to pay the special cash dividend that is a condition to the closing of the merger and the Class V transaction;

 

   

the failure to satisfy required closing conditions to the merger and the Class V transaction in a timely fashion or at all, including the failure to obtain the necessary stockholder approvals of the amended merger agreement and the amended and restated Company certificate and the failure to obtain the debt financing;

 

   

the different factors that may affect the market price of our Class C Common Stock compared to the factors that affect the market price of our Class V Common Stock;

 

   

the fact the Class V stockholders will no longer directly benefit from increases in the value of VMware common stock;

 

   

the failure of an active trading market for the Class C Common Stock to develop or be sustained;

 

   

the lack of a book building process and stabilization activities in connection with the listing of the Class C Common Stock that would be undertaken in connection with an underwritten initial public offering;

 

   

the potential volatility of the trading price of the Class C Common Stock;

 

   

the possible adverse impact of inaccurate or unfavorable research reports by securities or industry analysts on the market price or trading volume of the Class C Common Stock;

 

   

the effect of the disparate voting rights of the Class A Common Stock, the Class B Common Stock and the Class C Common Stock on the trading price and liquidity of the Class C Common Stock;

 

   

the control of Dell Technologies by the MD stockholders and the ownership of a substantial majority of Dell Technologies’ common stock by the MD stockholders, the MSD Partners stockholders and the SLP stockholders;

 

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the existence of interests of the MD stockholders, the MSD Partners stockholders and the SLP stockholders and their respective affiliates that may conflict with the interests of other stockholders or those of Dell Technologies;

 

   

Dell Technologies’ status as a “controlled company” under NYSE rules;

 

   

differences in the rights of holders of Class C Common Stock compared to the rights of holders of Class V Common Stock;

 

   

the likelihood that the Company’s actual results of operations and financial position after the Class V transaction will be materially different from those reflected in the unaudited pro forma condensed consolidated financial statements included in this supplement; and

 

   

risks relating to the Company’s business and industry.

For a further discussion of these and other risks, contingencies and uncertainties, see “Risk Factors” in the proxy statement/prospectus, “Update to Risk Factors” in this supplement, and the Company’s filings with the SEC incorporated by reference into the proxy statement/prospectus and this supplement.

Because of these risks, contingencies and other uncertainties, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this supplement or the proxy statement/prospectus, as applicable. All subsequent written or oral forward-looking statements attributable to the Company or any person acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect changes in its expectations, events or circumstances, or new information after the date of this supplement, except as may be required under applicable federal securities laws.

 

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UPDATE TO COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

The following information replaces the information under the heading “Comparative Historical and Unaudited Pro Forma Per Share Data” beginning on page 97 of the proxy statement/prospectus.

The following tables set forth:

 

   

(1) historical per share information and (2) unaudited pro forma per share information after giving effect to the transactions contemplated by the amended merger agreement, the debt financing and the Class V transaction, in each case for the six months ended August 3, 2018; and

 

   

(1) historical per share information and (2) unaudited pro forma per share information after giving effect to the transactions contemplated by the amended merger agreement, the debt financing (to the extent cash elections for more than $9 billion are made) and the Class V transaction, in each case for the fiscal year ended February 2, 2018.

The pro forma net income and cash dividends per share information gives effect to the transactions contemplated by the amended merger agreement, the debt financing and the Class V transaction as if they had occurred on February 4, 2017, the first day of the fiscal year ended February 2, 2018, and the pro forma book value per share information for the six months ended August 3, 2018 and the fiscal year ended February 2, 2018 gives effect to the transactions contemplated by the amended merger agreement, the debt financing and the Class V transaction as if they had occurred on August 3, 2018 and February 2, 2018, respectively.

This information is based on, and should be read together with, the selected historical consolidated financial information, the unaudited pro forma condensed consolidated financial information and the historical financial information that are included in or incorporated by reference into the proxy statement/prospectus and this supplement. See “Where You Can Find More Information” for information on how you can obtain copies of our incorporated SEC filings or access them via the internet. The unaudited pro forma per share information is presented for informational purposes only. The unaudited pro forma per share information does not purport to represent what the Company’s results of operations or financial condition would have been had the transactions contemplated by the amended merger agreement, the debt financing and the Class V transaction actually occurred on the dates indicated, and does not purport to project the Company’s results of operations or financial condition for any future period or as of any future date.

 

     Six Months Ended August 3, 2018  
     Historical     Pro Forma -
Maximum
Cash
Election(a)
    Pro Forma -
No Cash
Election(b)
 
     (in millions, except per share amounts)  

Pro forma earnings (loss) per share attributable to Dell Technologies Inc.—basic:

      

Class V Common Stock

   $ 3.97     $ —       $ —    

DHI Group—minimum exchange ratio

   $ (3.39   $ (1.87   $ (1.38

DHI Group—maximum exchange ratio

   $ (3.39   $ (1.80     N/A  

Pro forma earnings (loss) per share attributable to Dell Technologies Inc.—diluted:

      

Class V Common Stock

   $ 3.91     $ —       $ —    

DHI Group—minimum exchange ratio

   $ (3.40   $ (1.90   $ (1.41

DHI Group—maximum exchange ratio

   $ (3.40   $ (1.83     N/A  

Cash Dividend Per Share:

      

Class V Common Stock

   $ —       $ —       $ —    

DHI Group

   $ —       $ —       $ —    

Book Value Per Share:

      

Class V Common Stock

   $ 25.82     $ —       $ —    

DHI Group—minimum exchange ratio

   $ 6.02     $ (7.85   $ 9.88  

DHI Group—maximum exchange ratio

   $ 6.02     $ (7.57     N/A  

 

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(a)

Assumes the holders of Class V Common Stock make cash elections for $14 billion or more in the Class V transaction. Pro forma net loss attributable to Dell Technologies Inc. excludes (i) $105 million of investment income related to the short- and long-term investments expected to be liquidated by VMware in order to fund the special dividend and (ii) $118 million of interest related to the debt financing.

(b)

Assumes all holders of Class V Common Stock elect to receive shares of Class C Common Stock in the Class V transaction. Pro forma net loss attributable to Dell Technologies Inc. excludes $105 million of investment income related to the short- and long-term investments expected to be liquidated by VMware in order to fund the special dividend.

 

     Fiscal Year Ended February 2, 2018  
     Historical     Pro Forma -
Maximum
Cash
Election(a)
    Pro Forma -
No Cash
Election(b)
 
     (in millions, except per share amounts)  

Pro forma earnings (loss) per share attributable to Dell Technologies Inc.—basic:

      

Class V Common Stock

   $ 1.63     $ —       $ —    

DHI Group—minimum exchange ratio

   $ (5.61   $ (4.44   $ (3.36

DHI Group—maximum exchange ratio

   $ (5.61   $ (4.27     N/A  

Pro forma earnings (loss) per share attributable to Dell Technologies Inc.—diluted:

      

Class V Common Stock

   $ 1.61     $ —       $ —    

DHI Group—minimum exchange ratio

   $ (5.62   $ (4.45   $ (3.37

DHI Group—maximum exchange ratio

   $ (5.62   $ (4.29     N/A  

Cash Dividend Per Share:

      

Class V Common Stock

   $ —       $ —       $ —    

DHI Group

   $ —       $ —       $ —    

Book Value Per Share:

      

Class V Common Stock

   $ 21.64     $ —       $ —    

DHI Group

   $ 13.04     $ —       $ —    

 

(a)

Assumes the holders of Class V Common Stock make cash elections for $14 billion or more in the Class V transaction. Pro forma net loss attributable to Dell Technologies Inc. excludes $120 million of investment income related to the short- and long-term investments expected to be liquidated by VMware in order to fund the special dividend and (ii) $235 million of interest related to the debt financing.

(b)

Assumes all holders of Class V Common Stock elect to receive shares of Class C Common Stock in the Class V transaction. Pro forma net loss attributable to Dell Technologies Inc. excludes $120 million of investment income related to the short- and long-term investments expected to be liquidated by VMware in order to fund the special dividend.

 

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UPDATE TO MANAGEMENT OF DELL TECHNOLOGIES AFTER THE CLASS V TRANSACTION

The following information supplements and, where applicable, replaces the information under the heading “Management of Dell Technologies After the Class V Transaction” beginning on page 117 of the proxy statement/prospectus. We urge you to read this supplement and the proxy statement/prospectus carefully, including the attached annexes and the other documents incorporated by reference into the proxy statement/prospectus and this supplement. See “Where You Can Find More Information” for information on how to obtain copies of the incorporated documents or view them via the internet.

Board of Directors

Our business and affairs are managed under the direction of our board of directors.

Number; Membership; Election

Following the closing of the Class V transaction, the amended and restated Company certificate and the amended and restated Company bylaws will provide that our board of directors may consist of no fewer than three directors or more than 21 directors (provided that the number of Group IV Directors shall be one and the number of Group I Directors may be no fewer than three or more than 20). The number of authorized directors from time to time will be determined by the board of directors in accordance with the amended and restated Company bylaws. As of the record date for the special meeting, the board of directors is composed of six members, consisting of Michael S. Dell, David W. Dorman, Egon Durban, William D. Green, Ellen J. Kullman and Simon Patterson. Immediately after the Class V transaction, these individuals are currently expected to continue to serve as Group I directors.

Under the amended and restated Company certificate, the board of directors will be divided into two classes of directors, consisting of the Group I Directors and the Group IV Director. The Group I Directors will be elected annually by the holders of the Class A Common Stock, Class B Common Stock and Class C Common Stock voting together as a single class, and, beginning with the second annual stockholders meeting of the Company after the completion of the Class V transaction, the Group IV Director will be elected annually by the holders of the Class C Common Stock, voting separately as a series. Based on their beneficial ownership of our common stock as of the record date, immediately following the completion of the Class V transaction, the MD stockholders will beneficially own common stock representing approximately 65.1% of the total voting power of our outstanding common stock (assuming all holders of Class V Common Stock elect to receive shares of Class C Common Stock, and therefore that the minimum exchange ratio applies), approximately 66.8% of the total voting power of our outstanding common stock (assuming the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and the DVMT Trading Price is $104.55 or less, and therefore that the maximum exchange ratio applies) or approximately 67.1% of the total voting power (assuming the holders of Class V Common Stock elect in the aggregate to receive $14 billion or more in cash and the DVMT Trading Price is $120.00 or greater, and therefore that the minimum exchange ratio applies). For so long as the MD stockholders will continue to beneficially own common stock representing a majority of the total voting power of our outstanding common stock, the MD stockholders will have the ability to approve any matter submitted to the vote of all of the outstanding shares of our common stock voting together as a single class, including the election of the Group I Directors.

Term of Service

Elections of all members of the board of directors will be held annually at our annual meeting of stockholders. Each director will be elected for a term commencing on the date of the director’s election and ending on the date on which the director’s successor is elected and qualified, or, if earlier, the date of the director’s death, resignation, disqualification or removal. The election of the Group IV Director will occur beginning with the second annual meeting of the stockholders of the Company following the completion of the Class V transaction and will occur annually thereafter.

 

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Voting Rights of Directors

Under the amended and restated Company certificate, each member of the board of directors will be entitled to one vote on any matter submitted to a vote by the board of directors.

Nomination Rights of Stockholders

Under the Amended Sponsor Stockholders Agreements, each of the MD stockholders and the SLP stockholders will have the right to nominate a number of individuals for election as directors which is equal to (i) in the case where the MD stockholders and SLP stockholders beneficially own more than 70% of the total voting power for the regular election of directors of the Company, the percentage of (x) the total voting power for the regular election of directors of the Company beneficially owned by the MD stockholders or by the SLP stockholders, as the case may be, multiplied by (y) the number of directors then on the board of directors (and any vacancy thereon) who are not members of the audit committee, or (ii) in the case where the MD stockholders and SLP stockholders beneficially own 70% or less of the total voting power for the regular election of directors of the Company, the percentage of (x) the total voting power for the regular election of directors of the Company beneficially owned by the MD stockholders or by the SLP stockholders, as the case may be, multiplied by (y) the number of directors then on the board of directors (and any vacancy thereon), in each case of (i) and (ii), rounded up to the nearest whole number. Further, so long as the MD stockholders or the SLP stockholders each beneficially own at least 5% of all outstanding shares of the Company’s common stock entitled to vote generally in the election of directors, each of the MD stockholders or the SLP stockholders, as applicable, will be entitled to nominate at least one individual for election to the board of directors as a Group I Director. For additional information about the stock ownership of the MD stockholders and the SLP stockholders, see “Security Ownership of Certain Beneficial Owners and Management” in the proxy statement/prospectus. Under the amended and restated Company certificate, the holders of Class C Common Stock will have the right, voting separately as a series, to elect the Group IV Director, beginning with the second annual meeting of stockholders of the Company following the completion of the Class V transaction and annually thereafter. The nominating and corporate governance committee will select or recommend to the board of directors of the Company for selection the Group IV Director nominee for election or re-election at each annual meeting of the stockholders. The SLP Stockholders Agreement also will provide that, so long as the MD stockholders and the MSD Partners stockholders in the aggregate beneficially own common stock representing a majority of the total voting power of our outstanding common stock, the SLP stockholders will use their reasonable best efforts to expand the size of the board of directors to up to 21 directors at the request of the MD stockholders.

In addition, under the Amended Sponsor Stockholders Agreements, if any person nominated by the MD stockholders or the SLP stockholders ceases to serve on the board of directors as a Group I Director for any reason (except as a result of a reduction in such stockholder’s right to nominate Group I Directors pursuant to the applicable Amended Sponsor Stockholders Agreement), then the stockholder who nominated such Group I Director will be entitled to nominate a replacement so long as the stockholder is entitled to nominate at least one Group I Director to the board of directors at such time. For so long as either the MD stockholders or the SLP stockholders have the right to nominate a Group I Director or Group I Directors under their respective Amended Sponsor Stockholders Agreement, each of the Company, the MD stockholders and the SLP stockholders will agree to nominate such Group I Director or Group I Directors for election as part of the slate of directors that is included in the Company’s proxy statement and to provide the highest level of support for the election of such nominees as it provides to any other individual standing for election as a director of the Company. Each of the MD stockholders and the SLP stockholders also will be obligated to vote in favor of each Group I Director nominated by the MD stockholders or the SLP stockholders in accordance the MD Stockholders Agreement or the SLP Stockholders Agreement, as applicable, unless the SLP stockholders elect to terminate such arrangements under the SLP Stockholders Agreement. Further, under the Amended Sponsor Stockholders Agreements, none of the MD stockholders or SLP stockholders will nominate or support any person who is not nominated by the MD stockholders or the SLP stockholders or the then incumbent directors of the Company.

 

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The MSD Partners Stockholders Agreement will provide that the MSD Partners stockholders will be required to vote all of their common stock in favor of the election of each director who is included as part of the slate of directors set forth in any Company proxy statement and whose election the board of directors has recommended. In addition, under the MSD Partners Stockholders Agreement, the MSD Partners stockholders may not nominate or support any person for election to the board of directors who is not either nominated by the then incumbent directors of the Company or nominated pursuant to the Amended Sponsor Stockholders Agreements.

As of the record date, after giving pro forma effect to the completion of the Class V transaction and assuming the board of directors was composed of six members, three of whom sat on the audit committee, the MD stockholders would have been entitled to nominate two individuals for election as Group I Directors and the SLP stockholders would have been entitled to nominate one individual for election as a Group I Director. Immediately following the completion of the Class V transaction, the MD stockholders intend to designate Messrs. Dell and Patterson as their nominees and the SLP stockholders intend to designate Mr. Durban as their nominee. The Company currently expects that each of its current directors will continue to serve on the board of directors as Group I Directors following the completion of the Class V transaction. Pursuant to the amended merger agreement, the board of directors will appoint a fourth director who meets the independence requirements of the NYSE to the board by no later than June 30, 2019 after consultation with holders of Class C Common Stock.

Controlled Company Status

The Company has applied to list the Class C Common Stock on the NYSE in connection with the Class V transaction. If the listing is approved, we expect that the shares of Class C Common Stock will begin trading following the completion of the Class V transaction. As a result, the Company expects to continue to be subject to the governance requirements under the NYSE listing rules, even after the Class V Common Stock is delisted from the NYSE.

The Company is currently a “controlled company” under the rules of the NYSE and upon the completion of the Class V transaction will continue to be a “controlled company.” As a result, the Company qualifies for exemptions from, and has elected not to comply with, certain corporate governance requirements under NYSE rules, including the requirements that the Company have a board that is composed of a majority of “independent directors,” as defined under NYSE rules, and a compensation committee and a nominating committee that are composed entirely of independent directors. However, under the amended merger agreement, the Company has agreed, by no later than June 30, 2019, to establish a nominating and corporate governance committee of the board of directors as described below under “—Committees of the Board of Directors – Nominating and Corporate Governance Committee.” Even though the Company is a controlled company, it is required to comply with the rules of the SEC and the NYSE relating to the membership, qualifications and operations of the audit committee.

The rules of the NYSE define a “controlled company” as a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. Mr. Dell beneficially owns shares of our Class A Common Stock representing more than 50% of the voting power of our shares of common stock eligible to vote in the election of our directors. Following the closing of the Class V transaction, if the Company ceases to be a controlled company while the Class C Common Stock continues to be listed on the NYSE, the Company will be required to comply with the director independence requirements of the NYSE relating to the board of directors, a compensation committee and a nominating committee by the date the Company’s status changes or within specified transition periods applicable to those requirements.

Director Independence

The board of directors has affirmatively determined that Messrs. Dorman and Green and Mrs. Kullman, constituting three of our six directors that will serve on the board of directors as Group I Directors following the

 

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completion of the Class V transaction, are independent under the NYSE rules and the standards for independent directors established in our Corporate Governance Principles, which incorporate the director independence requirements of the NYSE rules. Pursuant to the amended merger agreement, the board of directors will appoint a fourth director who meets the independence requirements of the NYSE to the board by no later than June 30, 2019 after consultation with holders of Class C Common Stock. The NYSE rules provide that, in order to determine that a director is independent, the board of directors must determine that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). In accordance with the NYSE rules, when assessing the materiality of a director’s relationship (if any) with the Company, the board of directors considers materiality both from the standpoint of the director and from the standpoint of persons or organizations with which the director has an affiliation.

Committees of the Board of Directors

Under the MD Stockholders Agreement, for so long as the MD stockholders are entitled to nominate at least one Group I Director as described above under “—Board of Directors—Nomination Rights of Stockholders,” they may have at least one of their nominees then serving on the board of directors serve on each committee of the board (except the audit committee), to the extent permitted by applicable law and stock exchange rules and subject to certain exceptions. Under the SLP Stockholders Agreement, the SLP stockholders have the same right for so long they are entitled to nominate at least one Group I Director as described above under “—Board of Directors—Nomination Rights of Stockholders.”

Nominating and Corporate Governance Committee

The merger agreement amendment provides that the Company will establish a nominating and corporate governance committee of the board of directors by no later than June 30, 2019. The nominating and corporate governance committee will initially have three members, including Michael Dell (who will be the chairman of the nominating and corporate governance committee), Egon Durban and one director who meets the independence requirements of the NYSE. The committee’s responsibilities will include, among other matters, selecting or recommending to the board of directors for selection the Group IV Director nominee for election or re-election at each annual meeting of stockholders of the Company, beginning with the second annual meeting of stockholders of the Company following the completion of the Class V transaction.

 

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UPDATE TO SPECIAL MEETING OF STOCKHOLDERS

The following information supplements and, where applicable, replaces the information under the heading “Special Meeting of Stockholders” beginning on page 128 of the proxy statement/prospectus. We urge you to read this supplement and the proxy statement/prospectus carefully, including the attached annexes and the other documents incorporated by reference into the proxy statement/prospectus and this supplement. See “Where You Can Find More Information” for information on how to obtain copies of the incorporated documents or view them via the internet.

Voting; Proxies; Revocation; Transferred Shares

Revocability of Proxies

You may revoke your proxy or change your voting instructions at any time before your shares are voted at the special meeting.

Holders of Record

If you are a holder of record as of the record date, you may revoke your proxy by:

 

   

submitting a later proxy via the internet or by telephone;

 

   

submitting a later dated proxy by mail;

 

   

providing written notice of your revocation to the Company’s Corporate Secretary at Dell Technologies Inc., One Dell Way, Round Rock, Texas 78682, Attn: Corporate Secretary such that the notice is received before the special meeting; or

 

   

voting your shares at the special meeting.

Stockholders of record may change their proxy by using any one of these methods regardless of the method they previously used to submit their proxy. Only the latest dated proxy card you submit will be counted.

On November 15, 2018, the Icahn stockholders filed (i) a Schedule 13D/A with the SEC, which amends their prior Schedule 13D filed with the SEC on October 15, 2018, and (ii) definitive additional materials to their definitive proxy statement filed with the SEC on October 15, 2018, in each case disclosing their intention to terminate their opposition to the Class V transaction and their solicitation of the Company’s stockholders to vote against all proposals in the proxy statement/prospectus. Advisors to Dell Technologies have been informed by advisors to the Icahn stockholders that the Icahn stockholders do not intend to vote any proxies submitted to them on the gold proxy card at the special meeting. As a result, if you have previously submitted a gold proxy card sent to you by any Icahn stockholder or its affiliates, your vote will not be counted. We urge you to submit a later dated white proxy card that was enclosed with the proxy statement/prospectus or the November stockholder notice by (i) accessing the internet website specified on such proxy card, (ii) calling the toll-free number specified on such proxy card or (iii) marking, signing, dating and returning such proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the special meeting.

 

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UPDATE TO ELECTION TO RECEIVE CLASS C COMMON STOCK OR CASH CONSIDERATION

The following information supplements and, where applicable, replaces the information under the heading “Election to Receive Class C Common Stock or Cash Consideration” beginning on page 137 of the proxy statement/prospectus. We urge you to read this supplement and the proxy statement/prospectus carefully, including the attached annexes and the other documents incorporated by reference into the proxy statement/prospectus and this supplement. See “Where You Can Find More Information” for information on how to obtain copies of the incorporated documents or view them via the internet.

General Description of Election

Each eligible holder of shares of Class V Common Stock has the right to submit an election form specifying (1) the number of shares of Class V Common Stock with respect to which such holder desires to elect to receive share consideration, comprising of a number of shares of Class C Common Stock per share of Class V Common Stock as determined by the application of the exchange ratio, which will be between 1.5043 and 1.8130, referred to herein as share consideration, and (2) subject to the proration described below, the number of shares of Class V Common Stock with respect to which such holder desires to elect to receive cash consideration of $120.00 in cash, without interest, for each share of Class V Common Stock, referred to herein as cash consideration. Any share of Class V Common Stock with respect to which neither a share election nor a cash election has been properly made, and any share of Class V Common Stock with respect to which such an election has been revoked or lost and not subsequently made, will be converted into the right to receive share consideration.

In connection with the merger agreement amendment, we have updated the election form previously provided to you. We will use our reasonable efforts to cause an updated election form to be disseminated to persons who, as of the record date for the special meeting, are holders of record of shares of Class V Common Stock as soon as practicable following the filing of this supplement with the SEC. If you have not already submitted an election form or wish to change your election, we urge you to complete the updated election form when you receive it and submit it so that your election form is received by our exchange agent by the election deadline, as described below. If you have previously submitted an election form, and you do not wish to change your election, you do not need to do anything further because the increase in the share consideration and the cash consideration pursuant to the merger agreement amendment will automatically apply to your election choices indicated in the prior election form.

The updated election form reflects the increases to the consideration for the Class V transaction, the increased maximum aggregate cash consideration and the new election deadline.

Beginning on the eighth trading day prior to the date of the special meeting of stockholders, the Company expects to make publicly available on its website each day unofficial estimates of the aggregate amount of cash elections and share elections as of 5:30 p.m., New York City time, on the trading day prior to such publication that are based on preliminary reports from the exchange agent, in order to provide Class V stockholders with the most recent information available. However, holders should exercise caution in relying on these numbers, since they may not reflect the elections of large Class V stockholders whose elections may not be made until late in the process, and whose elections may significantly impact the aggregate amount of cash elections and share elections and thereby, the final exchange ratio. At any time prior to the election deadline, holders may change or revoke their election one or more times by submitting written notice to the exchange agent accompanied by a properly completed and signed updated election form or by withdrawing the certificates representing shares of Class V Common Stock, or any documents in respect of book-entry shares representing Class V Common Stock, previously deposited with the exchange agent as described under “Update to the Merger Agreement—Transaction Consideration and Elections.”

None of Dell Technologies, its board of directors or the Special Committee is making any recommendation as to whether Dell Technologies Class V stockholders should elect to receive share consideration or cash consideration. You must make your own decision with respect to such election.

 

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Holders Eligible to Submit Election Form

Holders eligible to submit an election form include each person who:

 

   

is a holder of record of shares of Class V Common Stock as of the record date for the special meeting, subject to the condition described below; or

 

   

becomes a holder of record of shares of Class V Common Stock during the period between the record date for the special meeting and the election deadline (5:30 p.m., New York City time, on the eighth trading day following the date on which the Company issues a public announcement that the requisite stockholder approvals for the Class V transaction have been obtained).

The record date for the special meeting is earlier than the date of the special meeting and the date on which the merger and the Class V transaction are expected to be completed. If a holder transfers shares of Class V Common Stock after the record date but before the special meeting, such holder will have transferred the right to participate in the Class V transaction and receive the transaction consideration. To receive the transaction consideration, a holder must hold the shares of Class V Common Stock through the effective time of the merger.

Election Deadline

In connection with the merger agreement amendment, we have:

 

   

changed the election deadline to 5:30 p.m., New York City time, on the eighth trading day following the date on which the Company issues a public announcement that the stockholder proposals described in the proxy statement/prospectus under “Proposal 1—Adoption of the Merger Agreement” and “Proposal 2—Adoption of Amended and Restated Company Certificate,” as supplemented by the updates described in this supplement under “Update to Proposal 1—Adoption of the Merger Agreement” and “Update to Proposal 2—Adoption of Amended and Restated Company Certificate,” have been approved by the Company’s stockholders; and

 

   

updated the election form previously provided to you.

All share elections and/or cash elections must be submitted on the election form previously provided to you or on the updated election form. If you have not already submitted an election form or wish to change your election, we urge you to complete the updated election form when you receive it and submit it so that your election form is received by our exchange agent by the election deadline, as described below. If you make a valid election (and do not subsequently validly revoke such election) prior to the election deadline, our exchange agent has advised that your shares of Class V Common Stock subject to such election may not be transferred after the election deadline and prior to the earlier of the closing or the termination of the Class V transaction. If you have previously submitted an election form, and you do not wish to change your election, you do not need to do anything further because the increase in the share consideration and the cash consideration pursuant to the merger agreement amendment will automatically apply to your election choices indicated in the prior election form.

All election forms must be received by American Stock Transfer & Trust Company, LLC, as the exchange agent, by the election deadline described above.

Submission of Election Form

In order for your share election or cash election to be properly made, you must submit along with your properly completed and signed election form (i) the certificates, if any, representing the shares of Class V Common Stock to which such election form relates, duly endorsed in blank or otherwise in form acceptable for transfer on the books of Dell Technologies, and (ii) in the case of book-entry shares representing shares of

 

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Class V Common Stock, any additional documents specified in the procedures set forth in the election form. The exchange agent has reasonable discretion to determine if any election is not properly made with respect to any shares of Class V Common Stock, and none of Dell Technologies, Merger Sub or the exchange agent has any duty to notify any stockholder of any such defect. In the event the exchange agent makes such a determination, such election will be deemed to be not in effect, and the shares of Class V Common Stock covered by such election will be converted into the right to receive share consideration, unless a proper election is thereafter timely made with respect to such shares.

The election form will contain instructions relating to the procedures you must follow with respect to the submission of share elections and/or cash elections. In addition, if you hold your shares of Class V Common Stock through a bank, brokerage firm or other nominee, you should follow the instructions provided by such bank, brokerage firm or other nominee to ensure that your election instructions are timely returned.

In connection with the merger agreement amendment, we have updated the election form previously sent to you. The updated election form reflects the increases in the consideration for the Class V transaction, the increased maximum aggregate cash consideration and the new election deadline. If you make a valid election (and do not subsequently validly revoke such election) prior to the election deadline, our exchange agent has advised that your shares of Class V Common Stock subject to such election may not be transferred after the election deadline and prior to the earlier of the closing or the termination of the Class V transaction.

If you have not already submitted an election form or wish to change your election, we urge you to complete the updated election form when you receive it and submit it so that your election form is received by our exchange agent by the election deadline described above. If you have previously submitted an election form, and you do not wish to change your election, you do not need to do anything further because the increase in the share consideration and the cash consideration pursuant to the merger agreement amendment will automatically apply to your election choices indicated in the prior election form. If you fail to submit a properly completed election form by this deadline or fail to properly elect which form of consideration to receive, you will be deemed to have made a share election and will receive solely shares of Class C Common Stock (other than cash received in lieu of a fractional share of Class C Common Stock).

At any time prior to the election deadline, you may change or revoke your election by submitting written notice to the exchange agent accompanied by a properly completed and signed revised election form or by withdrawing the certificates representing shares of Class V Common Stock, or any documents in respect of book-entry shares representing Class V Common Stock, previously deposited with the exchange agent. In addition, your election will be automatically revoked if (i) the shares subject to such election are subsequently transferred or (ii) we notify the exchange agent in writing that the merger agreement has been terminated without the Class V transaction having been completed. However, if you make a valid election (and do not subsequently validly revoke such election) prior to the election deadline, our exchange agent has advised that your shares of Class V Common Stock subject to such election may not be transferred after the election deadline and prior to the earlier of the closing or the termination of the Class V transaction.

If you elect to receive cash consideration for any share of Class V Common Stock you hold, no guarantee can be made that you will receive the amount of cash consideration and/or share consideration you elect. As a result of the proration procedures, the variable exchange ratio and other limitations described in this supplement and in the amended merger agreement, you may receive cash consideration and/or share consideration in amounts that are different from the amounts you elect to receive. In addition, if you elect to receive cash consideration for all shares of Class V Common Stock you hold, you may receive a mix of cash consideration and share consideration. Because the value of the share consideration and cash consideration may differ, you may receive consideration having an aggregate value less than that you elected to receive. If you elect to receive share consideration for all shares of Class V Common Stock you hold, you will receive only shares of Class C Common Stock, in such amount as is calculated pursuant to the variable exchange ratio.

 

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Proration of Aggregate Cash Consideration

The total amount of cash consideration payable in the Class V transaction is limited to $14 billion. If holders of Class V Common Stock elect to receive in the aggregate more than $14 billion in cash consideration, holders making cash elections will be subject to proration, and a portion of the consideration they requested in cash will instead be received in the form of Class C Common Stock according to the following methodology:

 

   

first, we will calculate the proration factor, which is the percentage of shares of Class V Common Stock covered by a cash election that will be payable in cash, by dividing the $14 billion cash election cap by the total amount of all cash elections; and

 

   

second, we will determine the number of shares of Class V Common Stock covered by the cash election that will be payable in cash by multiplying the total number of shares covered by the cash election by the proration factor, with the remainder of such shares to be exchanged for shares of Class C Common Stock (subject to the application of the applicable exchange ratio).

For example, if holders of Class V Common Stock elect in the aggregate to receive $15 billion in cash (representing approximately 62.7% of all outstanding shares of Class V Common Stock), the proration factor would be approximately 0.933 ($14 billion divided by $15 billion). A holder submitting a cash election for 1,000 shares of Class V Common Stock would be entitled to receive (1) cash in exchange for 933 of such shares (1,000 shares multiplied by the proration factor of 0.933) at $120.00 per share, or a total of $111,960, and (2) shares of Class C Common Stock for the remaining 67 shares of Class V Common Stock at the applicable exchange ratio and cash in lieu of any fractional shares of Class C Common Stock. With respect to such 67 shares of Class V Common Stock, (x) if the DVMT Trading Price is $120.00 or greater, the applicable exchange ratio will be 1.5043 (representing the minimum exchange ratio), and therefore such holder would be entitled to receive a total of 100 shares of Class C Common Stock and cash in lieu of 0.7881 fractional shares of Class C Common Stock and (y) if the DVMT Trading Price is $104.55 or less, the applicable exchange ratio will be 1.8130 (representing the maximum exchange ratio), and therefore such holder would be entitled to receive a total of 121 shares of Class C Common Stock and cash in lieu of 0.4710 fractional shares of Class C Common Stock.

If all holders of Class V Common Stock make cash elections (representing elections in the aggregate to receive approximately $23.9 billion in cash), the proration factor would be approximately 0.585 ($14 billion divided by approximately $23.9 billion). A holder submitting a cash election for 1,000 shares of Class V Common Stock would be entitled to receive (1) cash in exchange for 585 of such shares (1,000 shares multiplied by the proration factor) at $120.00 per share, or a total of $70,200, and (2) shares of Class C Common Stock for the remaining 415 shares of Class V Common Stock at the applicable exchange ratio and cash in lieu of any fractional shares of Class C Common Stock. With respect to such 415 shares of Class V Common Stock, (x) if the DVMT Trading Price is $120.00 or greater, the applicable exchange ratio will be 1.5043 (representing the minimum exchange ratio) and therefore such holder would be entitled to receive a total of 624 shares of Class C Common Stock and cash in lieu of 0.2845 fractional shares of Class C Common Stock and (y) if the DVMT Trading Price is $104.55 or less, the applicable exchange ratio will be 1.8130 (representing the maximum exchange ratio), and therefore such holder would be entitled to receive a total of 752 shares of Class C Common Stock and cash in lieu of 0.3950 fractional shares of Class C Common Stock.

If holders of Class V Common Stock do not elect to receive more than $14 billion in cash consideration, all holders will receive the form of consideration they elected to receive or were deemed to elect to receive.

 

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The following table further illustrates the approximate application of proration of the aggregate cash consideration, depending on the aggregate cash consideration elected in the first column. The amounts of cash consideration holders of Class V Common Stock elect in the aggregate to receive included in the following table are shown for illustrative purposes only. The actual aggregate amount of cash consideration holders of Class V Common Stock elect to receive may differ significantly from the amounts shown.

 

                              DVMT Trading Price
of $120.00 or Greater
  DVMT Trading Price
of $104.55 or Less

Aggregate
Amount

of Cash
Consideration
Elected
(in millions)

    Percentage
of Class V
Common
Stock

Electing
to Receive Cash
    Proration
Factor
    Aggregate
Amount of

Cash
Consideration
Payable
(in millions)
    Aggregate
Shares
of Class V
Common

Stock
Exchanged

for Cash
(in millions)
    Aggregate
Shares
of Class C
Common Stock
Issued to

Holders
Electing to
Receive  Cash
(in millions)
   

Consideration
Received by a
Holder Holding
1,000 Shares of
Class V
Common
Stock  that

Elects to

Receive Cash

  Aggregate
Shares
of Class C
Common

Stock
Issued to

Holders
Electing to
Receive  Cash
(in millions)
   

Consideration

Received by a

Holder

Holding 1,000

Shares of
Class V

Common Stock

that Elects to

Receive Cash

  $1,000       4.2     N/A     $ 1,000       8.3       —       $120,000 in cash     —       $120,000 in cash
  $3,000       12.5     N/A     $ 3,000       25.0       —       $120,000 in cash     —       $120,000 in cash
  $4,500       18.8     N/A     $ 4,500       37.5       —       $120,000 in cash     —       $120,000 in cash
  $9,000       37.6     N/A     $ 9,000       75.0       —       $120,000 in cash     —       $120,000 in cash
  $10,000       41.8     N/A     $ 10,000       83.3       —       $120,000 in cash     —       $120,000 in cash
  $14,000       58.5     N/A     $ 14,000       116.7       —       $120,000 in cash     —       $120,000 in cash
  $15,000       62.7     0.933     $ 14,000       116.7       12.5     $111,960 in cash and 100 shares of Class C Common Stock with cash in lieu of 0.7881 fractional shares     15.1    

$111,960 in cash

and 121 shares of

Class C Common

Stock with cash in

lieu of 0.4710

fractional shares

  $18,000       75.2     0.778     $ 14,000       116.7       50.1     $93,360 in cash and 333 shares of Class C Common Stock with cash in lieu of 0.9546 fractional shares     60.4    

$93,360 in cash

and 402 shares of

Class C Common

Stock with cash in

lieu of 0.4860

fractional shares

  $23,923       100.0     0.585     $ 14,000       116.7       124.4     $70,200 in cash and 624 shares of Class C Common Stock with cash in lieu of 0.2845 fractional shares     149.9    

$70,200 in cash

and 752 shares of

Class C Common

Stock with cash in

lieu of 0.3950

fractional shares

The Company expects to publicly announce whether holders making cash elections are subject to proration as soon as practicable following the election deadline. For additional information about the share election and the cash election, see “Update to Questions and Answers Regarding the Class V Transaction and the Special Meeting,” including “—What will holders of Class V Common Stock receive in the Class V transaction?” in this supplement.

Updated Election Forms and Related Documents

As previously described in the proxy statement/prospectus, Dell Technologies has appointed the exchange agent to coordinate the payment of the applicable transaction consideration following the closing of the Class V transaction. In connection with the merger agreement amendment, we have updated the election form previously provided to you. We will use our reasonable efforts to cause an updated election form package to be disseminated to persons who, as of the record date for the special meeting, are holders of record of shares of Class V Common Stock as soon as practicable following the filing of this supplement with the SEC. Such holders and all persons who become holders of record of shares of Class V Common Stock between the record date for the special meeting and the election deadline

 

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can obtain the updated election form package by written or oral request, made no later than December 4, 2018 (which is five business days before the date of the special meeting of stockholders), directed to:

American Stock Transfer & Trust Company, LLC

Operations Center

Attn: Reorganization Department

6201 15th Avenue

Brooklyn, NY 11219

Telephone: (718) 921-8317

Toll-free: (877) 248-6417

Fax: (718) 234-5001

The updated election form package contains an updated election form for you to complete in order to make a share election and/or a cash election. The updated election form package also contains detailed instructions on how to complete the election form.

As further described in the updated election form package, in order to make a share election and/or a cash election, holders of Class V Common Stock will be required to properly complete, execute and return the documents described below, in the manner described below, by the election deadline:

 

   

Updated Election Form. If you have not already submitted an election form or wish to change your election, complete and sign the updated election form according to the instructions provided therein. If you have previously submitted an election form, and you do not wish to change your election, you do not need to do anything further because the increase in the share consideration and the cash consideration pursuant to the merger agreement amendment will automatically apply to your election choices indicated in the prior election form.

 

   

Stock Certificates. Submit the certificates, if any, representing the shares of Class V Common Stock to which such election form relates, duly endorsed in blank or otherwise in form acceptable for transfer on the books of Dell Technologies.

 

   

Form W-9. Complete the Substitute Form W-9 provided with the election form package, or if you are a non-U.S. person, request from the exchange agent, and complete, sign and return an appropriate Form W-8.

Please carefully read the documents contained in the updated election form package, including the information booklet provided in that package. The updated election form reflects the increases to the consideration for the Class V transaction, the increased maximum aggregate cash consideration and the new election deadline.

 

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UPDATE TO PROPOSAL 1—ADOPTION OF THE MERGER AGREEMENT

The following information supplements and, where applicable, replaces the information under the heading “Proposal 1—Adoption of the Merger Agreement” beginning on page 141 of the proxy statement/prospectus. We urge you to read this supplement and the proxy statement/prospectus carefully, including the attached annexes and the other documents incorporated by reference into the proxy statement/prospectus and this supplement. See “Where You Can Find More Information” for information on how to obtain copies of the incorporated documents or view them via the internet.

Supplemental Background of the Class V Transaction

Following the announcement of the Class V transaction on July 2, 2018, the Company, the Special Committee and their respective advisors had discussions and meetings with various Class V stockholders in which some of the stockholders expressed concerns regarding the terms of the Class V transaction.

On July 10, 2018, the Special Committee met telephonically to discuss feedback received by Evercore, its financial advisor, from certain Class V stockholders and Evercore’s equity securities analysts concerning the Class V transaction, as well as feedback that had been received by Goldman Sachs, financial advisor to Dell Technologies, from certain Class V stockholders and communicated to Evercore. At the meeting, representatives of Evercore described that the feedback generally reflected concern about the implied $48.4 billion valuation of the Company and the $109.00 per share value of the Class V Common Stock. Evercore further noted that certain Class V stockholders had indicated that they considered the cash election of up to $9 billion to be an advantageous feature of the transaction. Also at the meeting, representatives of Joele Frank, Wilkinson Brimmer Katcher, advisor to the Special Committee, referred to herein as Joele Frank, discussed recent media reports describing the Class V stockholder reaction to the Class V transaction.

On July 24, 2018, Egon Durban, a director of Dell Technologies and Managing Partner and Managing Director of Silver Lake Partners, met with a representative of a large holder of Class V Common Stock, referred to herein as Stockholder A. At the meeting, the representative of Stockholder A shared his perspective regarding the Class V transaction, which perspective was consistent with the feedback that had been received by Goldman Sachs and Evercore as described above.

From July through September 2018, the members of the Special Committee spoke telephonically at various times with the Special Committee’s advisors on various matters related to the process and circumstances surrounding stockholder approval of the Class V transaction, including the associated preparation of the proxy statement/prospectus concerning the Class V transaction.

The board of directors and the Special Committee continued to believe that the Class V transaction on the terms originally announced was in the best interests of the Class V stockholders and the Company. However, in light of such feedback, the prospect that the Class V stockholder approval of the Class V transaction might not be obtained and the continued strength of the Company’s financial and operational performance, the Company began in September 2018 to re-evaluate an initial public offering of the Class C Common Stock as a potential alternative strategy that it could pursue if the Class V transaction was not consummated. On October 3, 2018, the Company publicly disclosed such contingency planning while also reaffirming its commitment to the Class V transaction.

On September 18, 2018, Dell Technologies hosted an analyst meeting in New York City. The event featured presentations and discussions from the Dell Technologies executive team with a focus on Dell Technologies’ transformation, company strategy and financial overview.

On September 27, 2018, Dell Technologies held a regularly scheduled meeting of its board of directors. During the meeting, representatives of Goldman Sachs provided the board of directors with a summary of the feedback it had received from Class V stockholders concerning the Class V transaction.

 

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On September 27, 2018, P. Schoenfeld Asset Management LP filed a notice of exempt solicitation with the SEC, attaching a letter to Dell Technologies’ board of directors and a presentation in which it expressed concerns regarding the economic terms of the Class V transaction.

On October 1, 2018, several large investment banks presented their views to members of Dell Technologies’ executive team and representatives of Silver Lake Partners regarding a potential initial public offering of Class C Common Stock.

Beginning in early October 2018, Dell Technologies and its advisors began to evaluate potential financing alternatives that could enable Dell Technologies to increase the maximum amount of the aggregate cash consideration in the Class V transaction. Such potential financing alternatives included the incurrence of additional debt, the sale of equity securities or a combination of debt and equity financing. In the course of evaluating such potential financing alternatives, representatives of Dell Technologies and Silver Lake Partners met with, and provided information to, several potential sources of debt financing and several potential equity investors.

From October 2 through 4, 2018 and again from October 9 through 11, 2018, representatives of Dell Technologies and Goldman Sachs held a series of meetings in several cities throughout the United States with significant holders of Class V Common Stock and certain other prospective investors as part of an investor road show. The road show provided representatives of Dell Technologies and Goldman Sachs the opportunity to speak to such investors regarding Dell Technologies’ transformation, business strategy and financial results, as well as the terms of the Class V transaction. During the course of these meetings, some of the Class V stockholders indicated that they were not supportive of the Class V transaction as originally announced on July 2, 2018. Representatives of Goldman Sachs kept representatives of Evercore informed as to the feedback from stockholders received in these meetings. Additionally, Simpson Thacher & Bartlett LLP, legal advisor to Dell Technologies and Silver Lake Partners, referred to herein as Simpson Thacher, kept representatives of Latham & Watkins LLP, legal advisor to the Special Committee, referred to herein as Latham, informed with respect to such meetings.

On October 15, 2018, Carl C. Icahn and certain of his affiliates, collectively referred to herein as the Icahn stockholders, filed a Schedule 13D with the SEC disclosing (i) that certain of such affiliates had acquired, or may acquire pursuant to forward contracts, in the aggregate, approximately 8.3% of the outstanding Class V Common Stock, all of which may be deemed to be beneficially owned by Carl C. Icahn, and (ii) the Icahn stockholders’ opposition to the Class V transaction and their intention to solicit Dell Technologies’ stockholders to vote against all proposals contained in the proxy statement/prospectus. In furtherance of their stated intentions, on October 16, 2018, the Icahn stockholders filed a preliminary proxy statement with the SEC opposing the Class V transaction and for use in soliciting votes of the Class V stockholders in opposition to all such proposals. The Icahn stockholders filed definitive proxy materials on October 30, 2018.

Later on October 15, 2018, the Special Committee met telephonically to discuss the Icahn stockholders’ Schedule 13D and opposition to the Class V transaction. At the meeting, representatives of Evercore described the claims in the Icahn stockholders’ open letter to Class V stockholders, and representatives of Joele Frank described the media and Class V stockholder reaction. Also at the meeting, representatives of Latham relayed from Simpson Thacher the feedback received from Class V stockholders and other investors during the Company’s recent analyst meeting and investor road show.

On October 20, 2018, the Special Committee met telephonically to discuss with representatives of Latham the proposed public disclosure of Silver Lake Partners’ plan to transfer a portion of its interest in Dell Technologies, then held in a 2007 vintage fund, in part to Silver Lake Partners’ newest flagship fund and in part to a newly formed separate investment vehicle.

On October 22, 2018, Silver Lake Partners publicly disclosed that it had received approval on behalf of its investors to transfer the portion of its interest in Dell Technologies that is held in a 2007 vintage fund in part to Silver Lake Partners’ newest flagship fund and in part to a newly formed separate investment vehicle. Silver

 

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Lake Partners disclosed that such transaction is intended to give Silver Lake Partners and its affiliated funds the flexibility to hold their shares of common stock of Dell Technologies for the long term, consistent with Silver Lake Partners’ belief that Dell Technologies remains an attractive long-term investment opportunity.

On October 26, 2018, representatives of Goldman Sachs and Simpson Thacher informed representatives of Evercore and Latham, respectively, that Dell Technologies was evaluating the possibility of incurring up to $5 billion of debt financing, the proceeds of which could be used to increase the maximum amount of the aggregate cash consideration that could be received by Class V stockholders in the Class V transaction. Representatives of Goldman Sachs and Simpson Thacher stated that any such debt financing transaction and increase in aggregate cash consideration would be subject to the approval of the Special Committee and the Dell Technologies board of directors. They also indicated that no other changes to the merger agreement were under consideration at such time.

On October 27, 2018, the Special Committee met telephonically to discuss the Company’s consideration of potential changes to the terms of the Class V transaction. At the meeting, representatives of Latham explained that representatives of Simpson Thacher had communicated to Latham that the Company was considering increasing the maximum amount of cash consideration from $9 billion to $14 billion, which additional cash consideration would be funded by additional debt financing obtained by the Company, although no decision to increase the aggregate cash election amount had been made at that time. Latham noted that, according to Simpson Thacher, the Company was not considering any other changes to the terms of the Class V transaction at such time.

Also on October 27, 2018, representatives of Simpson Thacher provided a draft merger agreement amendment to representatives of Wachtell Lipton, Rosen & Katz, legal advisor to Michael Dell and MSD Partners, referred to herein as Wachtell Lipton, which contemplated that Dell Technologies would incur $5 billion of debt financing, the proceeds of which would be used to increase the maximum amount of the aggregate cash consideration in the Class V transaction.

On October 29, 2018, representatives of Simpson Thacher informed representatives of VMware’s advisors that Dell Technologies was evaluating the possibility of incurring up to $5 billion of debt financing for the purpose and subject to the approvals that had been communicated to representatives of Latham on October 26. Representatives of Simpson Thacher informed VMware’s advisors that no other changes to the merger agreement were under consideration at such time, but that Dell Technologies would likely seek a waiver under the VMware Agreement in order to permit the merger agreement to be amended if the decision were made to increase the maximum amount of the aggregate cash consideration that could be received by Class V stockholders pursuant to the Class V transaction.

Between October 29 and October 31, 2018, representatives of Dell Technologies and Silver Lake Partners contacted ten banks regarding the potential provision of debt financing and began to negotiate commitment letters pursuant to which certain of the banks would commit to provide up to $5 billion of such financing. Also on October 29, 2018, representatives of Dell Technologies and Silver Lake Partners held a meeting with representatives of several large institutional investors regarding a potential cash investment in the Class C Common Stock as a potential source of equity financing for the increase to the maximum amount of the aggregate cash consideration which was being contemplated.

On October 30 and 31, 2018, representatives of Dell Technologies met with the credit rating agencies to discuss the potential impact of an additional $5 billion of debt financing on the credit ratings assigned to indebtedness of the Company and its subsidiaries. As a result of the feedback received by the Company from the credit rating agencies following such meetings, Dell Technologies does not expect a credit ratings downgrade related to the incurrence of such financing.

On October 30, 2018, representatives of Simpson Thacher provided a draft merger agreement amendment to representatives of Latham and Gibson, Dunn & Crutcher LLP, legal advisor to the VMware special committee,

 

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referred to herein as Gibson Dunn, which contemplated the Company incurring debt financing to generate proceeds that would be used to increase the maximum amount of the aggregate cash consideration in the Class V transaction. The draft merger agreement amendment reflected the potential incurrence of $3 billion of debt financing, as the Company had not yet determined whether it would seek the full $5 billion of debt financing being discussed with the banks and the credit rating agencies.

On October 31, 2018, representatives of Simpson Thacher provided certain draft ancillary documents to representatives of Latham, Gibson Dunn and Morrison & Foerster LLP, legal advisor to VMware, referred to herein as Morrison Foerster, that would be required in connection with the increase in the maximum amount of the aggregate cash consideration. Those documents included a waiver by VMware under the VMware Agreement, referred to herein as the VMware waiver, to approve Dell Technologies’ entry into the merger agreement amendment.

On November 1, 2018, the Icahn stockholders issued a press release announcing they had commenced an action pursuant to Section 220 of the DGCL against Dell Technologies seeking to inspect certain of the Company’s books and records, referred to herein as the 220 lawsuit, and that they had filed a complaint in this action in Delaware Chancery Court on October 31, 2018, as described under “—Litigation Relating to the Class V Transaction.”

Also on November 1, 2018, Dell Technologies’ management conducted a call with representatives of Evercore to provide a business and financial update on the Company and VMware.

On November 2, 2018, the Special Committee met telephonically to discuss the Company’s ongoing consideration of potential changes to the terms of the Class V transaction. Representatives of Latham and Evercore explained that representatives of Simpson Thacher and Goldman Sachs had, respectively, communicated that the Company was considering increasing the maximum amount of the cash consideration from $9 billion to either $12 billion or $14 billion, although no decision to increase the aggregate cash election amount had been made at that time and any decision was dependent on, among other factors, feedback the Company was expecting to receive from credit rating agencies regarding any impact the incurrence of additional indebtedness would have on the Company’s credit rating. At the meeting, the Special Committee also discussed potential responses to any revised Class V transaction terms the Company might have proposed, including additional changes to the economic terms and/or changes relating to the Company’s post-transaction corporate governance. The Special Committee also discussed the Company’s legal obligation to obtain the Special Committee’s approval of any revised Class V transaction in order to proceed with a revised Class V transaction. Representatives of Latham discussed the 220 lawsuit.

On the evening of November 2, 2018, following discussions with representatives of Simpson Thacher and further discussions between representatives of Simpson Thacher and representatives of Latham, representatives of Goldman Sachs contacted a limited number of large Class V stockholders, including Stockholder A but not including the Icahn stockholders, to ask whether they would be interested in entering into confidentiality arrangements that would permit a more comprehensive exchange of views on the Class V transaction. By November 4, 2018, two Class V stockholders had agreed to such a confidentiality arrangement, followed by two others on November 5. By November 6, two additional Class V stockholders had agreed to such confidentiality arrangements. Among the six Class V stockholders who agreed to confidentiality arrangements were Dodge & Cox, Elliott Management, Canyon Partners and Mason Capital Management, referred to collectively herein as the publicly supporting stockholders.

Beginning on November 4, 2018, representatives of Goldman Sachs discussed with each of the Class V stockholders who had agreed to confidentiality arrangements the potential to increase the maximum amount of the aggregate cash consideration in the Class V transaction. In their discussions with Goldman Sachs, such Class V stockholders provided their views regarding the economic- and governance-related terms of the Class V transaction. While each Class V stockholder indicated that an increase in the amount of aggregate cash

 

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consideration would be a material improvement to the Class V transaction terms, each Class V stockholder also stated that such a change would not be sufficient to gain its support for the Class V transaction without an increase in the amount of the per share consideration and, in some instances, changes to the corporate governance-related terms of the Class V transaction.

Following initial conversations between representatives of Goldman Sachs and the Class V stockholders who had agreed to confidentiality arrangements, representatives of Evercore separately spoke with those Class V stockholders. Representatives of Evercore and Goldman Sachs then conferred with each other, confirmed that the feedback they had each separately received was consistent, and agreed that representatives of Goldman Sachs would continue to speak with such Class V stockholders and would keep the representatives of Evercore informed of such conversations. From the time of these discussions until the announcement of the revised terms of the Class V transaction on November 14, 2018, representatives of Goldman Sachs were in daily contact with these Class V stockholders and kept representatives of Evercore informed of those conversations.

During the period of November 2 through 6, 2018, representatives of Simpson Thacher, Wachtell Lipton, Latham, Morrison Foerster and Gibson Dunn exchanged drafts of various documents, including drafts of a merger agreement amendment that contemplated increasing the maximum amount of the aggregate cash consideration in the Class V transaction to an amount to be agreed and the incurrence of debt to finance any such increase.

On November 5, 2018, a hearing was held in the Court of Chancery of the State of Delaware regarding the 220 lawsuit. The Court scheduled a trial for November 19, 2018 to further assess the Icahn stockholders’ demand for inspection of books and records of Dell Technologies.

On November 6, 2018, The Wall Street Journal reported that, according to unidentified sources, Dell Technologies had been contacting large Class V stockholders to discuss potentially enhancing the terms of the Class V transaction.

Also on November 6, 2018, the Special Committee met telephonically to discuss the Company’s ongoing consideration of potential changes to the terms of the Class V transaction and initial feedback that the Company’s representatives received from Class V stockholders who had agreed to confidentiality arrangements with the Company. At the meeting, representatives of Evercore explained that representatives of Goldman Sachs had informed Evercore that, based on the Company’s recent meetings with credit rating agencies, the Company’s credit rating was not expected to be adversely impacted if the Company obtained $5 billion of additional debt financing to fund an increase in the maximum amount of the cash consideration. Representatives of Evercore also explained that, based on initial feedback from holders of the Class V Common Stock, an increase in the maximum amount of the cash consideration, without an increase in the per share price of the Class V Common Stock, likely would not garner sufficient support from Class V stockholders for approval of the the Class V transaction. At that meeting, representatives of Latham also provided the Special Committee with an update regarding the 220 lawsuit.

On November 7, 2018, Mr. Durban met with a representative of Stockholder A regarding potentially revising the terms of the Class V transaction.

On November 8, 2018, Hallandale Beach Police and Fire Retirement Plan filed a putative stockholder class action lawsuit in Delaware Chancery Court in connection with the Class V transaction, as described under “—Litigation Relating to the Class V Transaction.”

On November 8, 2018, the Special Committee met telephonically to discuss the Company’s ongoing consideration of potential changes to the terms of the Class V transaction and additional feedback that the Company’s representatives had received from Class V stockholders who had agreed to confidentiality arrangements. At the meeting, representatives of Evercore discussed the Class V stockholder outreach performed

 

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by the Company and subsequent discussions conducted by Evercore with certain Class V stockholders regarding the terms of the Class V transaction. Representatives of Evercore also presented a preliminary financial analysis of a range of potential revised Class V transaction terms. The Special Committee determined that it would inform Mr. Durban that the Special Committee believed, based on feedback from the Class V stockholders, that the Company would need to increase the proposed per share price of the Class V Common Stock in order to obtain Class V stockholder approval of the Class V transaction, should increase the cash consideration by the full $5 billion discussed and also should consider enhanced governance terms.

Also on November 8, 2018, following the Special Committee meeting earlier in the day, the members of the Special Committee discussed the potential revised Class V transaction terms with Mr. Durban and a representative of Goldman Sachs, including, among other things, increasing the per share price of the Class V Common Stock, the potential increase in aggregate cash consideration and the addition to the Company’s board of directors of a director separately elected by holders of the Class C Common Stock.

On November 8, 2018, representatives of Goldman Sachs commenced negotiations with Stockholder A regarding revised Class V transaction terms that would include an increase to the per share consideration, an increase to the maximum cash consideration and changes to Dell Technologies’ post-transaction corporate governance. On November 8 and 9, representatives of Goldman Sachs communicated on multiple occasions with representatives of Stockholder A. On November 8, 2018, representatives of Goldman Sachs proposed to Stockholder A potential revised transaction terms that would include a fixed stock exchange ratio of 1.4793 shares of Class C Common Stock per share of Class V Common Stock or cash consideration of $118.00 per share of Class V Common Stock, subject to a maximum cash consideration of $14 billion. This proposed exchange ratio represented an aggregate pro forma ownership for the Class V stockholders of 16.5% to 32.8% of Dell Technologies (on a treasury stock method basis) depending on the amount of cash elections. Representatives of Stockholder A indicated that such an increase was insufficient to cause them to publicly support the Class V transaction. In addition to discussing such economic terms, Stockholder A proposed that an additional independent director be added to the Dell Technologies board of directors no later than one year after the completion of the Class V transaction.

Between November 8 and November 10, 2018, representatives of Goldman Sachs and Simpson Thacher communicated with representatives of Evercore and Latham, respectively, as to the status of the discussions with Stockholder A.

On November 9, 2018, the Special Committee met telephonically to discuss the Company’s ongoing consideration of potential changes to the terms of the Class V transaction. At the meeting, the Special Committee discussed that, based on a telephonic meeting between Mr. Durban and the members of the Special Committee, the Company and Stockholder A were discussing revised terms for the Class V transaction that would include an increase in the per share price of the Class V Common Stock from $109.00 to $118.00 and an increase in the maximum cash consideration from $9 billion to $14 billion. Also at the meeting, representatives of Latham described that representatives of Simpson Thacher had contacted Latham regarding potential changes to the terms of the Class V transaction, which would include a commitment by the Company to appoint an additional director to the board of directors who would qualify as independent under NYSE rules.

Also on November 9, 2018, in further discussions with Stockholder A, Mr. Durban proposed increasing the per share consideration to a fixed exchange ratio of 1.5044 shares of Class C Common Stock per share of Class V Common Stock or cash consideration of $120.00 per share of Class V Common Stock, subject to a maximum cash consideration of $14 billion. This proposed exchange ratio represented an aggregate pro forma ownership for the Class V stockholders of 17.0% to 33.1% of Dell Technologies (on a treasury stock method basis) depending on the amount of cash elections. On November 9, Stockholder A clarified that its proposal on governance matters was that a fourth independent director would be added to the board of directors no later than one year after the completion of the Class V transaction, that an additional director would be elected directly by the holders of Class C Common Stock voting separately as a series, and that the Company’s nominee for such director would be determined by a

 

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nominating and corporate governance committee that would include at least one independent director. Stockholder A also stated on November 9 that it was prepared to publicly support a revised Class V transaction reflecting the latest economic terms proposed by Mr. Durban and the governance terms proposed by Stockholder A, referred to herein as the November 9 terms. Representatives of Goldman Sachs and Simpson Thacher, on behalf of Dell Technologies, provided regular updates concerning the discussions with Stockholder A to representatives of Evercore and Latham, respectively, on behalf of the Special Committee.

On November 9, 2018, prior to the clarification from Stockholder A that its proposal on governance matters included one director elected directly by the holders of Class C Common Stock voting separately as a series, not simply a fourth independent director, representatives of Latham conveyed to representatives of Simpson Thacher and Wachtell Lipton a proposal from the Special Committee that a fourth independent director be selected by a committee of independent directors, subject to the approval of the full board of directors.

On November 9, 2018, Dell Technologies’ management conducted a call with representatives of Evercore to provide a business and financial update on the Company and VMware, and Dell Technologies’ management confirmed that the unaudited financial projections of the Company and VMware, which had previously been provided to the Special Committee as described in the proxy statement/prospectus under “Proposal 1—Adoption of the Merger Agreement—Certain Financial Projections,” were the most recent projections of Dell Technologies and VMware that were available.

Also on November 9, 2018, a member of the Special Committee contacted one of the publicly supporting stockholders to discuss its perspective on the potential revised terms of the Class V transaction.

After Stockholder A stated to Mr. Durban that it was prepared to publicly support a revised Class V transaction on the November 9 terms, representatives of Simpson Thacher reviewed the November 9 terms with representatives of Latham and notified them that Stockholder A had indicated it was prepared to support such terms. Representatives of Simpson Thacher stated that Silver Lake was supportive of a revised Class V transaction on the November 9 terms, including the governance terms proposed by Stockholder A, and would expect the nominating and corporate governance committee initially to consist of Mr. Dell, Mr. Durban and one independent director. A representative of Wachtell Lipton also attended that call and subsequently confirmed to representatives of Simpson Thacher that he believed that Mr. Dell would be supportive of the revised governance provisions if the certificate of incorporation and bylaws of Dell Technologies were revised to provide that the aggregate number of directors would be determined by the board of directors pursuant to the bylaws.

On November 10, 2018, representatives of Goldman Sachs conveyed the November 9 terms, which Stockholder A stated that it was prepared to publicly support, to the other Class V stockholders who had agreed to confidentiality arrangements, and informed each such Class V stockholder that a large Class V stockholder who had agreed to the confidentiality arrangements supported such terms. Certain of such Class V stockholders expressed a willingness to support a transaction on such terms if other Class V stockholders were similarly supportive. However, a number of such Class V stockholders, including one large Class V stockholder, referred to herein as Stockholder B, indicated that they were not supportive of the proposed economic provisions of the November 9 terms. Representatives of Stockholder B expressed the view that on a pro forma basis the Class V stockholders should own 19.8% of Dell Technologies (on a treasury stock method basis), assuming the maximum amount of $14 billion of cash elections in the Class V transaction.

Also on November 10, 2018, a member of the Special Committee discussed with Stockholder A the potential revised terms of the Class V transaction, including, among other things, the implied price per share to be paid for the Class V Common Stock in the Class V transaction.

During November 9 and 10, 2018, representatives of Simpson Thacher, Wachtell Lipton, Latham, Morrison Foerster and Gibson Dunn continued to exchange drafts of various documents, including drafts of a merger agreement amendment implementing the proposed November 9 terms and containing as exhibits a revised form

 

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of the amended and restated Company certificate and a form of amended and restated bylaws of Dell Technologies reflecting the governance-related provisions of the November 9 terms. In addition, the Class V stockholders who had agreed to confidentiality arrangements were provided a form of Investor Voting and Support Agreement pursuant to which such Class V stockholder would commit, among other things, to vote the shares of Class V Common Stock held by it on the record date in favor of the Class V transaction.

On November 10, 2018, legal counsel for Stockholder A provided comments to the draft form of Investor Voting and Support Agreement to representatives of Simpson Thacher, and representatives of Simpson Thacher sent such counsel drafts of the merger agreement amendment, the revised form of amended and restated Company certificate and the form of amended and restated bylaws of Dell Technologies reflecting the proposed November 9 terms. Shortly thereafter, copies of these drafts were sent to representatives of Latham, Wachtell Lipton, Morrison Foerster and Gibson Dunn.

On November 10, 2018, representatives of Evercore conducted a call with representatives of DISCERN Analytics, an independent industry expert engaged on behalf of the Special Committee, during which DISCERN Analytics affirmed its June 26, 2018 report to the Special Committee.

Also on November 10, 2018, representatives of Latham contacted representatives of Simpson Thacher to convey the Special Committee’s position that, in light of the term of the director being elected by the holders of the Class C Common Stock first commencing at the Company’s 2020 annual meeting, the board of directors should be expanded to include a fourth independent director no later than June 30, 2019 rather than by the first anniversary of the closing of the Class V transaction, as had previously been contemplated in the November 9 terms. Later that day, representatives of Wachtell Lipton and Simpson Thacher notified representatives of Latham that this change had been accepted by Mr. Dell and Silver Lake Partners. The November 9 terms as modified by this request of the Special Committee are referred to herein as the November 10 terms. Following such notification, representatives of Simpson Thacher circulated a revised draft of the merger agreement amendment reflecting the November 10 terms to all the parties to whom it had sent a draft of the merger agreement amendment earlier that day.

During November 10 and 11, 2018, representatives of Goldman Sachs and representatives of Stockholder B had a series of calls to discuss the different perspectives of Dell Technologies and Stockholder B regarding the implied value of the Class C Common Stock included in the share consideration. Such calls did not result in any change in the positions of either Stockholder B or Dell Technologies. Late on November 11, representatives of Goldman Sachs conveyed to representatives of Stockholder B a proposal under which the exchange ratio would increase if stockholder elections regarding the share consideration and cash consideration and the market price of the Class V Common Stock prior to the closing of the Class V transaction implied that the per share value of Class V Common Stock attributable to the Class C Common Stock included in the share consideration was less than the $120.00 per share value of the cash consideration. Under this proposal, unless all Class V stockholders elected to receive, or were deemed to have elected to receive, only the share consideration, the proposed exchange ratio of 1.5044 would be subject to increase if the volume-weighted average price, referred to herein as VWAP, of the Class V Common Stock was less than $120.00 per share during a five- to ten-day trading period prior to the completion of the Class V transaction. The initial proposal communicated by Goldman Sachs was that, in the event that the VWAP of the Class V Common Stock during the trading period equaled or exceeded $120.00 per share, then the exchange ratio would be 1.5044 shares of Class C Common Stock per share of Class V Common Stock, as agreed to with Stockholder A, which would result in Class V stockholders owning approximately 17% of Dell Technologies (on a treasury stock method basis), assuming the maximum amount of $14 billion of cash elections in the Class V transaction. However, if the VWAP of the Class V Common Stock during the trading period was less than $120.00 per share, the exchange ratio would increase up to a maximum of 1.6890 shares of Class C Common Stock per share of Class V Common Stock, which would result in the Class V stockholders owning approximately 18.7% of Dell Technologies (on a treasury stock method basis), if the VWAP of the Class V Common Stock during the trading period was equal to or less than $104.55, assuming the maximum amount of $14 billion of cash elections in the Class V transaction. The specific dates that would

 

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constitute the VWAP measurement period were not discussed. Representatives of Goldman Sachs indicated that this proposal, referred to herein as the November 11 terms, was in preliminary form and that they intended to provide additional information about the November 11 terms the following day. Representatives of Stockholder B indicated that they would consider the November 11 terms and that such a proposal had the potential to bridge the value gap reflected in their discussions. Apart from the proposed modification to the exchange ratio, no other aspect of the November 10 terms was proposed to be modified in the November 11 terms.

On November 11, 2018, the VMware special committee met telephonically to consider the reaffirmation of the declaration of the VMware special dividend and the entry by VMware into the VMware waiver. Representatives of Gibson Dunn and Lazard Frères & Co., financial advisor to the VMware special committee, referred to herein as Lazard, were also in attendance. At the meeting, the VMware special committee reviewed the analysis of the valuation firm and the valuation firm’s opinion, referred to herein as the VMware solvency opinion, to the effect that, as of November 11, 2018, and based upon and subject to the factors, procedures, assumptions, qualifications, limitations and other matters set forth in the opinion, (i) the surplus of VMware (on a consolidated basis) exceeded the amount of the VMware special dividend and (ii) after giving effect to the payment of the VMware special dividend, (a) the assets of VMware (on a consolidated basis), at a fair valuation, exceeded its debts (including contingent liabilities), (b) VMware (on a consolidated basis) would be able to pay its debts (including contingent liabilities) as they became due, and (c) VMware (on a consolidated basis) would not have an unreasonably small amount of assets (or capital) for the businesses in which it was engaged or in which VMware management had indicated it intended to engage. Following presentations from representatives of Lazard and Gibson Dunn, the VMware special committee resolved, in light of the potential merger agreement amendment being contemplated and subject to receipt of the determination by a member of the VMware special committee that any subsequent changes thereto be acceptable to VMware for purposes of executing the VMware waiver, referred to herein as the VMware acceptability determination, and subject to, and conditional upon, each of the conditions to the payment of the VMware special dividend, to recommend to the VMware board of directors that it reaffirm, and not revoke, the declaration of the VMware special dividend, and that it enter into the VMware waiver upon receipt of the acceptability determination, and directed representatives of Gibson Dunn to inform representatives of Simpson Thacher that the VMware special committee had adopted such resolutions.

Further on November 11, 2018, the VMware board of directors met telephonically to consider the reaffirmation of the declaration of the VMware special dividend and the entry by VMware into the VMware waiver. Representatives of Morrison Foerster, Gibson Dunn and the valuation firm were also in attendance. Representatives of Morrison Foerster reviewed with the VMware board of directors their applicable fiduciary duties. Karen Dykstra, as chairperson of the VMware special committee, informed the VMware board of directors that, earlier that day, the VMware special committee had resolved to recommend to the VMware board of directors that it reaffirm, and not revoke, in light of the merger agreement amendment, and subject to receipt of the acceptability determination, the declaration of the VMware special dividend, and that it enter into the VMware waiver upon receipt of the acceptability determination, and discussed the VMware special committee’s rationale for such recommendation. The VMware board of directors also reviewed the analysis of the valuation firm and the VMware solvency opinion. Following discussion, the VMware board of directors resolved, subject to the receipt of the acceptability determination, to reaffirm, and not revoke, the authorization and declaration of the VMware special dividend and enter into the VMware waiver upon receipt of the acceptability determination. The VMware board of directors also established a payment date for the VMware special dividend of (i) the business day immediately following the record date for the VMware special dividend, subject to Dell Technologies providing a certification to VMware that if Dell Technologies’ pro rata share of the VMware special dividend is received by Dell Technologies’ subsidiaries that are holders of record of VMware common stock by 3:30 p.m., Eastern time, on such date, the closing of the Class V transaction will occur on such date (provided that if payment to Dell Technologies’ subsidiaries holding of record of VMware common stock cannot occur prior to 3:30 p.m., Eastern time, the VMware special dividend will be paid on the next business day) or (ii) any other date which the VMware dividend committee (as defined below) may establish as the payment date for the VMware special dividend with the approval of Dell Technologies, provided that the dividend committee may establish such other date only if it acts prior to the date that, absence such action, would otherwise be

 

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established as the payment date. In addition, the VMware board of directors approved resolutions clarifying that the conditions to payment of the VMware special dividend would be modified to account for changes to the conditions in the merger agreement resulting from the merger agreement amendment. The VMware board of directors established a dividend committee of the VMware board of directors, comprised of Mr. Gelsinger and referred to herein as the VMware dividend committee, and delegated to the VMware dividend committee the power and authority to establish a new record date and payment date for the VMware special dividend. The VMware board of directors also directed representatives of Morrison Foerster to inform representatives of Simpson Thacher that the VMware board of directors had adopted the foregoing resolutions.

Also on November 11, 2018, the Special Committee met telephonically to discuss the Company’s ongoing consideration of potential changes to the terms of the Class V transaction and to receive a preliminary financial analysis of such potential changes. At the meeting, representatives of Latham provided the Special Committee with a summary of bring-down due diligence that had been conducted with the Company’s management in connection with a potential change to the terms of the Class V transaction. Also at the meeting, representatives of Evercore reviewed the progression of discussions regarding the terms of the Class V transaction that had occurred among the Company and the Special Committee, including an increase in the per share price of the Class V Common Stock from $109.00 to $120.00, an increase in the maximum cash consideration from $9 billion to $14 billion, a commitment to appoint an additional director to the board of directors who would qualify as independent under NYSE rules and the addition of a requirement for one director to be elected to the board of directors by the holders of Class C Common Stock voting separately as a series.

Also on November 11, 2018, the board of directors of Dell Technologies met telephonically to receive an update regarding the conversations which representatives of Goldman Sachs had been having with the Class V stockholders who had entered into confidentiality arrangements.

Between November 11 and November 14, 2018, representatives of Goldman Sachs and Simpson Thacher communicated with representatives of Evercore and Latham, respectively, with respect to the status of the discussions with Stockholder B.

On November 12, 2018, representatives of Goldman Sachs continued their discussions with Stockholder B regarding revising the terms of the Class V transaction to increase the exchange ratio based upon stockholder elections regarding the share consideration and the cash consideration and if the market price of the Class V Common Stock prior to the closing of the Class V transaction implied that the per share value of Class V Common Stock attributable to the Class C Common Stock included in the share consideration was less than the $120.00 per share value of the cash consideration. In connection with those discussions, representatives of Goldman Sachs provided a table outlining the specifics of the preliminarily proposed November 11 terms. This presentation reflected that the amount of any increase in the exchange ratio would depend on both the VWAP of the Class V Common Stock during the trading period and the aggregate amount of cash consideration the Class V stockholders elected to receive in the Class V transaction.

Later on November 12, 2018, representatives of Stockholder B informed representatives of Goldman Sachs that the November 11 terms were not sufficient to satisfy Stockholder B’s concerns that the Class V stockholders should own up to 19.8% of Dell Technologies (on a treasury stock method basis) on a pro forma basis, assuming the maximum amount of $14 billion of cash elections in the Class V transaction.

On November 13, 2018, after speaking to representatives of Dell Technologies, representatives of Goldman Sachs presented a revised proposal to Stockholder B. The revised proposal, referred to herein as the November 13 terms, contained the same terms as the November 11 terms except that it proposed increasing the maximum economic ownership of Dell Technologies by the Class V stockholders to approximately 19.8% (on a treasury stock method basis) – which equated to a maximum exchange ratio of 1.8079 shares of Class C Common Stock per share of Class V Common Stock – in the event that the VWAP of the Class V Common Stock was equal to or less than $104.55 during the trading period, assuming the maximum amount of $14 billion

 

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of cash elections in the Class V transaction. In addition, the November 13 terms specified that the measurement period for such VWAP would be the ten trading days commencing on the date on which the receipt of the stockholder approvals for the Class V transaction is publicly announced. The November 13 terms also updated the minimum exchange ratio to 1.5043 shares of Class C Common Stock per share of Class V Common Stock to reflect more accurate rounding.

Separately, on November 13, 2018, the Icahn stockholders filed a supplemental investor presentation to be used in connection with their discussions relating to Dell Technologies. Subsequently, on November 14, Carl C. Icahn issued a statement in response to press inquiries regarding rumors about the Class V transaction which presented Mr. Icahn’s views with respect to certain governance matters relating to Dell Technologies.

On November 14, 2018, representatives of Stockholder B proposed to representatives of Goldman Sachs that the trading period for determining the VWAP of the Class V Common Stock occur prior to the special meeting and that the maximum exchange ratio be fixed to equal 1.8130 shares of Class C Common Stock per share of Class V Common Stock, assuming the maximum amount of $14 billion of cash elections in the Class V transaction. Representatives of Goldman Sachs replied that such a trading period was not acceptable to Dell Technologies because trading prices during such period could potentially reflect a meaningful discount if there was uncertainty about the outcome of the vote at the special meeting. After further discussions with representatives of Dell Technologies, representatives of Goldman Sachs communicated a proposal to increase the maximum exchange ratio to 1.8130 shares of Class C Common Stock per share of Class V Common Stock – which equated to economic ownership of Dell Technologies by the Class V stockholders of approximately 19.845% (on a treasury stock method basis) – in the event that the VWAP of the Class V Common Stock was equal to or less than $104.55, assuming the maximum amount of $14 billion of cash elections in the Class V transaction, and proposed that the measurement period for such VWAP be a 17-day trading period centered on the date on which the receipt of the stockholder approvals for the Class V transaction is publicly announced, so that the trading period would be evenly split between trading days prior to the announcement of the receipt of the stockholder approvals and trading days following the announcement date. Later in the afternoon of November 14, representatives of Stockholder B indicated to representatives of Goldman Sachs that they would be supportive of a revised Class V transaction reflecting the terms which had been proposed earlier that day, referred to herein as the November 14 terms, which would include (i) a stock exchange ratio ranging between 1.5043 and 1.8130 shares of Class C Common Stock per share of Class V Common Stock depending on the aggregate amount of cash elections in the Class V transaction and the VWAP of the Class V Common Stock during the 17 consecutive trading days ending on the eighth trading day following the date on which the receipt of the stockholder approvals for the Class V transaction is publicly announced, (ii) cash consideration of $120.00 per share of Class V Common Stock, subject to an aggregate maximum of $14 billion, (iii) expansion of the board of directors to include a fourth independent director by no later than June 30, 2019 and (iv) the creation, by no later than June 30, 2019, of a nominating and corporate governance committee initially comprised of Messrs. Dell and Durban and one independent director to, among other things, nominate an additional director to be elected by the holders of Class C Common Stock, beginning with the second annual meeting of stockholders following the closing of the Class V transaction. Representatives of Goldman Sachs then confirmed with the other publicly supporting stockholders, including Stockholder A, that each would be prepared to enter into an Investor Voting and Support Agreement to support a revised Class V transaction reflecting the November 14 terms. The publicly supporting stockholders collectively hold approximately 17% of the Class V Common Stock. In addition, one of two Class V stockholders who agreed to confidentiality arrangements but is not a publicly supporting stockholder confirmed that it would privately support a revised Class V transaction reflecting the November 14 terms.

Beginning on November 10, 2018 and concluding late into the evening of November 14, legal counsel for each of the constituents – Dell Technologies, Mr. Dell, the Special Committee, VMware and the publicly supporting stockholders – exchanged multiple drafts of the merger agreement amendment, the respective Investor Voting and Support Agreements and certain other ancillary documents and negotiated the terms of each such document.

 

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On November 14, 2018, representatives of Simpson Thacher provided representatives of Gibson Dunn and Morrison Foerster with a proposed final form of the merger agreement amendment. In consultation with Gibson Dunn and Lazard, the VMware special committee reviewed the changes to the merger agreement amendment from the draft reviewed by the VMware special committee at the meeting and made the VMware acceptability determination, following which Gibson Dunn notified VMware and Morrison Foerster of the VMware acceptability determination. Also on November 14, 2018, in connection with certain changes to the election deadline and record date for the VMware special dividend contemplated by the merger agreement amendment, the VMware dividend committee resolved, by written consent, that the record date for the VMware special dividend will be (i) the business day following the election deadline (or if such business day is December 24th or December 31st, the next succeeding day that is a business day), provided such day is at least eight calendar days following the later of (a) the date on which Dell Technologies issues a public announcement that it has received votes from its stockholders sufficient to approve the Class V transaction in accordance with the amended merger agreement, and (b) the date that the shares of Class C Common Stock to be issued in the Class V transaction have been approved for listing on the NYSE, subject to official notice of issuance and compliance by Dell Technologies with all applicable listing standards of the NYSE on the date on which such shares begin trading on the NYSE, or (ii) any other date which the VMware dividend committee may establish for the VMware special dividend with the approval of Dell Technologies, provided that the VMware dividend committee may establish such other date only if it acts prior to the date that, absent such action, would otherwise be established as the record date for the VMware special dividend.

In the evening of November 14, 2018, the Special Committee met telephonically to consider the definitive revised terms of the Class V transaction. Representatives of Latham led the members of the Special Committee through a detailed discussion of the terms and conditions set forth in the merger agreement amendment. Representatives of Evercore then discussed with the members of the Special Committee their financial analysis of the Class V transaction (giving effect to the merger agreement amendment) and, following such discussion, delivered to the members of the Special Committee Evercore’s oral opinion, which opinion was subsequently confirmed by delivery of a written opinion dated November 14, 2018, that, as of the date thereof, and based upon and subject to the factors, procedures, assumptions, qualifications, limitations and conditions set forth in its written opinion, the transaction consideration was fair, from a financial point of view, to the Class V stockholders (other than Dell Technologies and its affiliates). Following discussion and further careful consideration of the potential reasons for and against the proposed Class V transaction (as discussed below under “—Recommendation of the Special Committee”), the Special Committee unanimously determined that it is fair to and in the best interest of the Class V stockholders for Dell Technologies to enter into the merger agreement amendment and declared that the amended merger agreement and the other transactions contemplated by the amended merger agreement, including the adoption of the amended and restated Company certificate, are advisable. Accordingly, the Special Committee resolved to recommend that the Dell Technologies board of directors adopt the merger agreement amendment and approve the execution, delivery and performance thereof and the other transactions contemplated by the amended merger agreement, including the amended and restated Company certificate, and resolved to recommend adoption of the amended merger agreement and the transactions contemplated by the amended merger agreement, including the amended and restated Company certificate, by the holders of Class V Common Stock.

Following the Special Committee meeting, the Dell Technologies board of directors met telephonically to consider the definitive revised terms of the Class V transaction. Members of Dell Technologies management and representatives of Silver Lake Partners, Simpson Thacher, Wachtell Lipton and Goldman Sachs were also in attendance. Richard Rothberg, General Counsel and Secretary of Dell Technologies, reviewed with the directors their fiduciary duties in considering the proposed Class V transaction, including applicable standards for director conduct under Delaware law. Messrs. Dorman and Green stated that the Special Committee had convened a meeting earlier that evening and had unanimously determined that it is fair to and in the best interest of the Class V stockholders for Dell Technologies to enter into the merger agreement amendment and declared that the amended merger agreement and the other transactions contemplated by the amended merger agreement, including the adoption of the amended and restated Company certificate, are advisable. Accordingly, the Special

 

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Committee recommended that the Dell Technologies board of directors adopt the merger agreement amendment and approve the execution, delivery and performance thereof and the other transactions contemplated by the amended merger agreement, including the amended and restated Company certificate, and stated that they had resolved to recommend adoption of the amended merger agreement and the transactions contemplated by the amended merger agreement, including the amended and restated Company certificate, by the holders of Class V Common Stock. A representative of Simpson Thacher then led the directors through a discussion of a written summary of the terms and conditions of the merger agreement amendment, the Investor Voting and Support Agreements and the debt financing. Representatives of Goldman Sachs also gave a presentation to the board of directors regarding a financial analysis of the revised Class V transaction. Tom Sweet, Dell Technologies’ Chief Financial Officer, then discussed the recent performance of Dell Technologies and the contemplated debt financing. Following that discussion, Messrs. Dorman and Green, in their capacity as members of the Special Committee, were excused in order to allow the remaining members of the board of directors to discuss the proposed amended Class V transaction with respect to the interests of the holders of Class A Common Stock, Class B Common Stock and Class C Common Stock. With the benefit of the foregoing presentations and discussion, the remaining directors then considered the terms and conditions of the merger agreement amendment and the transactions contemplated by the amended merger agreement, including the draft VMware waiver, with respect to the interests of the holders of Class A Common Stock, Class B Common Stock and Class C Common Stock. The Dell Technologies board of directors (except for Messrs. Dorman and Green, who did not vote) unanimously determined that the merger in accordance with the terms of the amended merger agreement, the amended merger agreement and the other transactions contemplated thereby, including the adoption of the amended and restated Company certificate, were advisable and in the best interests of the holders of Class A Common Stock, Class B Common Stock and Class C Common Stock and recommended that the Dell Technologies board of directors adopt the merger agreement amendment and approve the execution, delivery and performance of the merger agreement amendment and the consummation of the merger and the other transactions contemplated by the amended merger agreement, including the amended and restated Company certificate. Following such resolutions, Messrs. Dorman and Green rejoined the meeting and were informed of the resolutions just passed by the Dell Technologies board of directors (other than Messrs. Dorman and Green). In light of the recommendation of the Special Committee and of the Dell Technologies board of directors (other than Messrs. Dorman and Green) and following further careful consideration of the potential reasons for and against the proposed Class V transaction (as discussed below under “—Recommendation of the Board of Directors”), the Dell Technologies board of directors unanimously determined that the merger in accordance with the terms of the amended merger agreement, the amended merger agreement and the other transactions contemplated by the amended merger agreement, including the amended and restated Company certificate, were advisable and in the best interests of the stockholders of Dell Technologies, adopted the merger agreement amendment and approved the execution, delivery and performance of the merger agreement amendment and the consummation of the merger and the other transactions contemplated by the amended merger agreement, including the amended and restated Company certificate, and resolved to recommend adoption of the amended merger agreement and the transactions contemplated by the amended merger agreement, including the amended and restated Company certificate, by the stockholders of Dell Technologies.

Also in the evening of November 14, 2018, Dell Technologies and VMware executed the VMware waiver, Dell Technologies and each of the publicly supporting stockholders executed the Investor Voting and Support Agreements, and Dell Technologies and Merger Sub executed the merger agreement amendment. Concurrently with the execution of the merger agreement amendment, Dell and the commitment parties executed the debt commitment letter, providing for up to $5 billion principal amount of debt financing to fund the increase in maximum aggregate cash consideration contemplated by the merger agreement amendment (as described below under “—Financing of the Increased Maximum Aggregate Amount of Cash Consideration”).

Prior to the opening of the markets on November 15, 2018, Dell Technologies issued a press release announcing the merger agreement amendment, the Investor Voting and Support Agreements and the debt commitment letter providing for up to $5 billion of debt financing.

 

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Later in the day on November 15, Mr. Icahn issued a statement in response to press inquiries regarding the revised Class V transaction in which he indicated that he had determined that a proxy fight would be unwinnable and had decided to withdraw the 220 lawsuit and terminate the Icahn stockholders’ proxy contest. The 220 lawsuit was voluntarily dismissed the same day.

On November 19, 2018, advisors to the Icahn stockholders informed advisors to Dell Technologies that the Icahn stockholders had notified Broadridge Financial Solutions that they did not intend to vote any proxies submitted to them on the gold proxy card at the special meeting and that they had requested that Broadridge Financial Solutions cease providing them with updates regarding the pending vote.

On November 21, 2018, Dell Technologies mailed a letter to Class V stockholders regarding the merger agreement amendment.

Recommendation of the Special Committee

At a meeting held on November 14, 2018, the Special Committee unanimously determined that the amended merger agreement and the transactions contemplated thereby, including the Class V transaction and the amended and restated Company certificate, are fair to and in the best interest of the Class V stockholders, and unanimously resolved to recommend that the board of directors approve the merger agreement amendment and the transactions contemplated by the amended merger agreement, including the Class V transaction and the amended and restated Company certificate. The Special Committee unanimously recommends that the holders of the Class V Common Stock entitled to vote thereon vote “FOR” the adoption of the amended merger agreement and “FOR” the adoption of the amended and restated Company certificate.

In evaluating the proposed transactions, including the Class V transaction, the Special Committee consulted with its advisors and, in reaching its determination and recommendation, considered a number of factors.

Many of the factors which the Special Committee considered favored its conclusion that the amended merger agreement and the transactions contemplated thereby are fair to and in the best interests of the Class V stockholders, including the following:

 

   

the anticipated value of the transaction consideration in comparison to historical trading prices for shares of Class V Common Stock, which transaction consideration had an implied value of $120 per share based on an assumed total equity value of Dell Technologies of $48.4 billion (which assumption was used by the Special Committee recognizing that the market price of the Class C Common Stock following the Class V transaction may imply a total equity value for the Company that is more than or less than such assumed equity value), and, therefore, the transaction consideration represents a premium of approximately 41.9% to the closing price of the Class V Common Stock on June 29, 2018, the last trading day prior to the day on which the Company announced the merger agreement, 42.8% to the 30 day trailing volume weighted average price of the Class V Common Stock on June 29, 2018 and 35.7% to the closing price of the Class V Common Stock on January 25, 2018, the last trading day prior to the day on which the Company filed an amended Schedule 13D statement with respect to its shares of VMware common stock;

 

   

the fact that the implied value of the transaction consideration of $120 per share under the amended merger agreement represented a 10.1% increase compared to the implied value of $109 per share under the original merger agreement;

 

   

the fact that up to $14 billion of the transaction consideration will be paid in cash, which represents up to 59% of the total transaction consideration and a 56% increase in the maximum aggregate cash consideration compared to the maximum aggregate cash consideration under the merger agreement, giving Class V stockholders the opportunity to realize immediate value for all or a portion of their investment and providing certainty of value for such portion;

 

   

the fact that exchange ratio will be at least 1.5043 shares of Class C Common Stock per share of Class V Common Stock, a 10.1% increase compared to the exchange ratio of 1.3665 shares of Class C Common

 

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Stock under the merger agreement, and may increase to a maximum exchange ratio of 1.8130 shares of Class C Common Stock per share of Class V Common Stock based upon the variable exchange ratio mechanism, which represented a 32.7 % increase compared to the exchange ratio of 1.3665 shares of Class C Common Stock under the merger agreement;

 

   

the fact that the amended merger agreement provides for an exchange ratio adjustment, which is intended to provide protection to Class V stockholders on the value of the share consideration given that there is no public market for the Class C Common Stock prior to the completion of the Class V transaction;

 

   

the fact that the Class V stockholders may elect to receive only the share consideration, giving Class V stockholders the opportunity to participate in the future value of the Class C Common Stock;

 

   

the fact that the value of the Class C Common Stock to be received by the Class V stockholders may increase, but such increase will not reduce the exchange ratio below 1.5043 shares of Class C Common Stock per share of Class V Common Stock;

 

   

the fact that, based on the capitalization of Dell Technologies determined using the treasury stock method immediately prior to the announcement of the Class V transaction, the Class V stockholders will hold approximately 33% of Dell Technologies’ outstanding common stock after the completion of the Class V transaction if the Class V stockholders elect to receive only share consideration and at least approximately 17% of Dell Technologies’ outstanding common stock if the Class V stockholders elect to receive the full $14 billion of cash consideration, allowing the Class V stockholders to share in the benefits of the long-term prospects of Dell Technologies;

 

   

the fact that approximately $9 billion of the cash consideration will be funded by a cash dividend distributed by VMware pro rata to all of its stockholders;

 

   

the fact that, with respect to the cash consideration of up to $5 billion that will be funded by additional debt financing of the Company, the Company had obtained $5 billion of committed debt financing to fund such portion of the cash consideration in full and that such additional debt financing was not expected to result in a reduction in the credit ratings of Dell Technologies, and considering also the limited number and nature of the conditions to the funding of the debt financing, the reputation of the debt financing sources and the obligations of the Company pursuant to the amended merger agreement to obtain the debt financing and cause such debt financing or any alternative financing to be funded;

 

   

that the transaction consideration under the merger agreement was initially determined following arms’-length negotiations by the Special Committee and, after public announcement of the merger agreement, that the enhanced transaction consideration was based on additional input from, and negotiations with, the Class V stockholders and the Special Committee;

 

   

the fact that the transaction consideration was viewed to present a higher likelihood of delivering greater value to the Class V stockholders than the status quo or other potential transactions after taking into account the ability to come to agreed terms for such other potential transactions and the execution risks and other concerns of the Special Committee as to the ability to successfully implement such other potential transactions, as described in the proxy statement/prospectus under “Proposal 1—Adoption of the Merger Agreement—Background of the Class V Transaction,” as supplemented by the description above under “—Supplemental Background of the Class V Transaction,” which other potential transactions included (1) a potential business combination with VMware and (2) an initial public offering of the Class C Common Stock, which would permit the board of directors to determine if and when to convert the Class V Common Stock into Class C Common Stock following such initial public offering, with a conversion premium for the Class V Common Stock fixed at a percentage of the then-current relative trading value of the Class V Common Stock to the Class C Common Stock;

 

   

the Special Committee’s understanding, based upon discussions with the VMware special committee and its advisors, that the VMware special committee and Dell Technologies were unlikely to reach mutually acceptable terms regarding a potential VMware business combination, as well as the terms of the VMware

 

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Agreement, which are consistent with the Special Committee’s understanding of VMware’s position with respect to a potential business combination with Dell Technologies and required that Dell Technologies file with the SEC an amendment to its Schedule 13D stating that it has concluded a review of potential business opportunities and has determined not to pursue a business combination with VMware;

 

   

the financial review conducted with respect to, and the Special Committee’s knowledge of and familiarity with, the Company’s and VMware’s respective businesses, operations, financial conditions, competitive positions and prospects;

 

   

the projected financial results of Dell Technologies and VMware provided by the respective managements of the two companies, as summarized in the proxy statement/prospectus under “Proposal 1—Adoption of the Merger Agreement—Certain Financial Projections” and below under “—Important Information About the Financial Projections,” which projections were confirmed by, Dell Technologies management prior to the Special Committee’s approval of the amended merger agreement;

 

   

the analysis of the Company’s projected financial results (including the assumptions of Dell Technologies management for VMware) and related macroeconomic and industry-specific trends and risks by the Special Committee’s industry consultant, DISCERN, and the assessment by DISCERN of certain key assumptions with respect to Dell Technologies’ projected financial results;

 

   

the Dell projections sensitivity case prepared by Evercore at the direction of the Special Committee, using certain alternative business assumptions and an analysis furnished to Evercore by DISCERN, which assumptions and analyses addressed (1) certain financial forecasts and other financial and operating data of the Company (including Dell Technologies management’s assumptions for VMware), (2) certain industry and market research and (3) other information, and which assumptions and analyses were confirmed by DISCERN to continue to be appropriate prior to the Special Committee’s approval of the amended merger agreement;

 

   

the financial analyses prepared by Evercore of the potential alternatives to the Class V transaction, including the benefits and considerations associated with the alternatives and their possible financial implications for the Class V stockholders;

 

   

the financial analyses presented to the Special Committee by Evercore, and the opinion of Evercore, dated November 14, 2018, to the Special Committee that, as of such date, and based upon and subject to the factors, procedures, assumptions, qualifications, limitations and other matters set forth in its written opinion, the transaction consideration was fair, from a financial point of view, to the Class V stockholders (other than Dell Technologies and its affiliates), which opinion is more fully described below under “—Opinion of Evercore Group L.L.C.”);

 

   

the fact that the amended merger agreement provides for additional corporate governance changes for Dell Technologies that would be implemented following the closing of the Class V transaction, including that, no later than June 30, 2019, (1) after consultation with holders of Class C Common Stock, the board of directors of the Company will appoint a fourth director to the board of directors of the Company who meets the independence requirements of the NYSE and (2) the Company will establish a nominating and corporate governance committee of the board of directors which will at all times include one director who meets the independence requirements of the NYSE;

 

   

the fact that the amended and restated Company certificate will, among other things, (1) provide that the holders of the Class C Common Stock will have the right, voting separately as a series, to elect one director, referred to as the Group IV Director, and that the provisions of the amended and restated Company certificate authorizing the Group IV Director may not be amended, altered or repealed in a manner that would have a material adverse effect on the powers or rights of the Class C Common Stock without the affirmative vote of a majority of the holders of the Class C Common Stock and (2) amend the definition of “IPO” in the existing Company certificate to mean that the consummation of the Class V transaction will be treated as an “IPO,” which will result in certain corporate governance changes for the Company after the consummation of the Class V transaction, including the elimination of separate classes of directors and the high-vote directorships associated with the classified board of directors and the elimination of consent rights

 

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that Michael Dell and Silver Lake Partners and their affiliated stockholders currently have with respect to certain “major corporate actions” under the Sponsor Stockholders Agreement;

 

   

the fact that Michael Dell and his affiliated investment entities and the funds affiliated with Silver Lake Partners that have investments in the Company agreed to enter into the Voting and Support Agreement under which Michael Dell, Silver Lake Partners and their affiliated stockholders, who together are the largest holders of the Company’s common stock and possess a majority of the total voting power of the common stock, irrevocably agreed to vote in favor of the amended merger agreement and the transactions contemplated thereby, to waive any appraisal rights in connection with the merger and to implement certain changes to the Company’s stockholder agreements, which changes, among others, will provide for a restriction on transfers of shares of Company common stock by Michael Dell, Silver Lake Partners and their affiliated stockholders for a period of 180 days following the completion of the merger;

 

   

the fact that, after discussions and negotiations with the Company, and in some cases, the Special Committee, and their respective advisors related to the terms of the amended merger agreement, funds affiliated with Dodge & Cox, Elliott Management, Canyon Partners and Mason Capital Management, which collectively hold approximately 17% of the Class V Common Stock, each agreed to enter into the Investor Voting and Support Agreements under which each irrevocably agreed to vote in favor of the amended merger agreement and the transactions contemplated thereby;

 

   

the review by the Special Committee with its legal and financial advisors, as applicable, of the structure of the proposed transactions and the financial and other terms of the amended merger agreement and related documents;

 

   

the closing conditions included in the amended merger agreement, including the stockholder approvals having been obtained, the payment of the VMware special dividend, the receipt of the proceeds of the debt financing, the ability of the dividend and debt financing proceeds to be transferred to the Company, the effectiveness of the Form S-4 Registration Statement, the listing of the Class C Common Stock on the NYSE, the shares of Class C Common Stock to be issued in the Class V transaction not exceeding the number of shares registered under the Form S-4 Registration Statement, no material adverse effect on Dell Technologies or VMware, the accuracy of the Company’s representations and warranties in the amended merger agreement and the performance of the Company’s covenants in all material respects;

 

   

the ability of the Special Committee to withdraw, modify or change its recommendation of the amended merger agreement prior to obtaining the stockholder approvals if the Special Committee determines, after consultation with its financial and legal advisors, that the failure to make such a withdrawal, modification or change would reasonably be expected to be inconsistent with the Special Committee’s fiduciary responsibilities under applicable law, and the ability of the Special Committee to direct the Company to terminate the amended merger agreement in the event of such a withdrawal, modification or change;

 

   

the fact that the Special Committee consists of two independent and disinterested directors of the Company who are not affiliated with Michael Dell, Silver Lake Partners or any of their affiliated entities, are not employees of the Company or any of its affiliates, and have no financial interest in the Class V transaction different from, or in addition to, the interests of the Class V stockholders, other than their interests described in the proxy statement/prospectus under “Proposal 1—Adoption of the Merger Agreement—Interests of Certain Directors and Officers,” as supplemented by the description below under “—Interests of Certain Directors and Officers”;

 

   

the fact that the Special Committee retained and was advised by its own independent legal and financial advisors;

 

   

the fact that the Special Committee’s unanimous approval was required for the Company to enter into (1) a business combination or merger with VMware that would result in the conversion or exchange of all or any portion of the Class V Common Stock into cash or other securities or (2) another transaction that if consummated would (a) amend the existing Company certificate to change the powers, preferences, rights or terms of the Class V Common Stock and/or (b) result in the conversion or exchange of all or any portion

 

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of the Class V Common Stock into cash or other securities, in the case of clauses (a) or (b), other than in accordance with the terms of the existing Company certificate, each referred to as a potential Class V Common Stock transaction;

 

   

the fact that, since the formation of the Special Committee, it was an express, irrevocable condition that any potential Class V Common Stock transaction be approved by the affirmative vote of Class V stockholders representing a majority of the aggregate voting power of the outstanding shares of Class V Common Stock (excluding any shares beneficially owned by any “affiliate” of the Company as defined by Rule 405 under the Securities Act);

 

   

the fact that the Special Committee was aware that it had no obligation to recommend any potential Class V Common Stock transaction and that the Special Committee had the authority to “say no” to any proposals made by the Company as to a potential Class V Common Stock transaction;

 

   

the involvement of the Special Committee in extensive deliberations over a period of five months regarding a potential Class V Common Stock transaction, including the Class V transaction, prior to announcement of the original Class V transaction on July 2, 2018, and additional deliberations prior to approval of the amended merger agreement, during which periods the Special Committee was provided with complete access to the Company’s management in connection with its due diligence;

 

   

the fact that, following the public announcement of the formation of the Special Committee, the Special Committee and its advisors discussed with, and sought the views of, Class V stockholders representing nearly 40% of the outstanding shares of Class V Common Stock regarding the potential Class V Common Stock transactions, which feedback is described in the proxy statement/prospectus under “Proposal 1—Adoption of the Merger Agreement—Background of the Class V Transaction”;

 

   

the fact that, following the public announcement of the Class V transaction, the Special Committee and its advisors continued to engage with, and seek feedback from, Class V stockholders regarding the Class V transaction and the amended merger agreement, which feedback is described above under “—Supplemental Background of the Class V Transaction”; and

 

   

the assessment of the Special Committee and its advisors of the risks of the Company choosing to convert the Class V Common Stock into Class C Common Stock following the completion of an initial public offering, subject to the fiduciary responsibilities of the board of directors, as well as the challenges of an initial public offering by the Company.

In the course of its deliberations, the Special Committee also considered a variety of risks and other potentially negative factors, including the following:

 

   

the fact that no public market for the Class C Common Stock currently exists and that the market price of the Class C Common Stock after the completion of the Class V transaction and other transactions may not imply an equity value of the Company of $48.4 billion;

 

   

the fact that a substantial portion of the tracking stock discount implied by the market price of the Class V Common Stock, relative to the market price of the VMware Class A common stock, will not be paid to the Class V stockholders in the Class V transaction and, instead, will benefit the Company and its stockholders on a pro rata basis (including Class V stockholders that receive share consideration in the Class V transaction to the extent of their pro rata ownership in the Company);

 

   

the fact that the aggregate cash consideration was fixed at the signing of the merger agreement amendment, and the maximum exchange ratio for the share consideration was fixed at 1.8130 shares of Class C Common Stock;

 

   

the fact that the exchange ratio adjustment will decrease based on the extent to which the Class V stockholders elect to receive cash consideration in the Class V transaction less than the maximum aggregate cash consideration;

 

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the fact that, following the Class V transaction, but based on the capitalization of Dell Technologies determined using the treasury stock method immediately prior to the announcement of the Class V transaction, the holders of Class A Common Stock and Class B Common Stock will continue to hold between approximately 96.8% of the aggregate voting power of the Company’s common stock if all $14 billion of cash is elected in the cash election and the DVMT Trading Price is $120.00 or greater, and therefore the minimum exchange ratio applies, and approximately 93.9% of the aggregate voting power of the Company’s common stock if all Class V stockholders choose the share election;

 

   

the fact that the Company will remain a “controlled company” under applicable NYSE rules and, therefore, the Company may elect to continue not to comply with certain corporate governance requirements, including the requirements that:

 

   

it have a board that is composed of a majority of “independent directors,” as defined under the rules of the NYSE;

 

   

it have a compensation committee that is composed entirely of independent directors; and

 

   

it have a nominating and corporate governance committee that is composed entirely of independent directors;

 

   

the risk that the Class V transaction could, subject to the terms of the VMware Agreement, facilitate a potential negotiated transaction with VMware such that the Company could be in a position to make an offer to VMware after having achieved the conversion of the Class V Common Stock, the benefits of which the former Class V stockholders would share only on a proportionate basis with the Company’s other common stockholders;

 

   

the possibility that the Class V transaction may not be completed or that completion may be unduly delayed for reasons beyond the control of the Special Committee or the Company;

 

   

the ability of the board of directors to withdraw, modify or change its recommendation of the amended merger agreement prior to obtaining the stockholder approvals if the board of directors determines, after consultation with its financial and legal advisors, that the failure to make such a withdrawal, modification or change would reasonably be expected to be inconsistent with the board of directors’ fiduciary responsibilities under applicable law, and the ability of the board of directors to direct the Company to terminate the amended merger agreement in the event of a withdrawal, modification or change of recommendation by the Special Committee;

 

   

the risk that the VMware special dividend contemplated by the amended merger agreement might not be obtained, resulting in a failure to satisfy the closing conditions in the amended merger agreement and complete the Class V transaction;

 

   

the risk that the debt financing contemplated by the amended merger agreement might not be obtained, resulting in a failure to satisfy the closing conditions in the amended merger agreement and complete the Class V transaction;

 

   

the risk that the debt financing contemplated by the amended merger agreement will increase the Company’s aggregate indebtedness, which subjects the Company to the risks of indebtedness described under “Update to Risk Factors—Risks Relating to our Business and our Industry”;

 

   

the fact that the Class V stockholders will not be entitled to appraisal rights under Delaware law in connection with the merger;

 

   

the risk that holders of the Class A Common Stock and Class C Common Stock will exercise appraisal rights in connection with the merger (other than the MD stockholders and the MSD Partners stockholders, who have waived such rights);

 

   

the risk that the Company does not obtain the required stockholder approvals;

 

   

the risk that the potential benefits sought in the Class V transaction might not be realized fully or at all;

 

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the risk that the pendency of the Class V transaction could result in the disruption of the Company’s business, including the possible diversion of management and employee attention; and

 

   

risks of the type and nature described in the proxy statement/prospectus under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” in this supplement under “Update to Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” and in the documents incorporated by reference into the proxy statement/prospectus and this supplement.

The Special Committee considered all of these factors as a whole and, on balance, concluded that they supported a determination to recommend the Class V transaction and the other transactions contemplated by the amended merger agreement, including the amended and restated Company certificate. The foregoing discussion of the information and factors considered by the Special Committee is not exhaustive. In view of the wide variety of factors considered by the Special Committee in connection with its evaluation of the Class V transaction and other transactions contemplated by the amended merger agreement and the complexity of these matters, the Special Committee did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. The Special Committee evaluated the factors described above, among others, and reached a consensus that the amended merger agreement and the transactions contemplated thereby, including the Class V transaction and the amended and restated Company certificate, were fair to and in the best interests of the Class V stockholders. In considering the factors described above and any other factors, individual members of the Special Committee may have viewed factors differently or given different weight or merit to different factors.

Recommendation of the Board of Directors

At a meeting held on November 14, 2018, the board of directors unanimously determined that the amended merger agreement and the transactions contemplated thereby, including the Class V transaction and the amended and restated Company certificate, are fair to and in the best interests of the Company and its stockholders, and unanimously resolved to approve the merger agreement amendment and the transactions contemplated by the amended merger agreement, including the Class V transaction and the amended and restated Company certificate. The board of directors unanimously recommends that all stockholders vote “FOR” the adoption of the amended merger agreement, “FOR” the adoption of the amended and restated Company certificate, “FOR” the approval of the transaction-related compensation proposal and “FOR” the approval of the adjournment proposal.

In evaluating the proposed transactions, including the Class V transaction, the board of directors consulted with its advisors and, in reaching its determination and recommendation, considered a number of factors.

Many of the factors which the board of directors considered favored its conclusion that the amended merger agreement and the transactions contemplated thereby are fair to and in the best interests of Dell Technologies and its stockholders, including the following:

 

   

the board of directors’ continued belief that the Class V transaction was a superior alternative to the status quo or other potential business opportunities it had evaluated, including a potential initial public offering of Dell Technologies common stock or a potential business combination between Dell Technologies and VMware, after taking into account the ability to come to agreed terms for such other potential transactions and the execution risks and other concerns of the board of directors as to the ability to successfully implement such other potential transactions, as described in the proxy statement/prospectus under “Proposal 1—Adoption of the Merger AgreementBackground of the Class V Transaction,” and above under “—Supplemental Background of the Class V Transaction”;

 

   

the board of directors’ continued belief that significant potential cross-selling revenue and related synergies between Dell Technologies and VMware could be achieved under the existing corporate structure, without consummating a business combination with VMware;

 

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the board of directors’ belief that the amended merger agreement was the product of arms’-length negotiations between certain large holders of Class V Common Stock and the Special Committee, representing the interests of only the Class V stockholders, on the one hand, and the board of directors, representing the interests of Dell Technologies and its stockholders as a whole, on the other hand, and contained terms and conditions that were, in the view of the board of directors, favorable to Dell Technologies and all of its stockholders;

 

   

the fact that the Special Committee retained and was advised by its own independent legal and financial advisors;

 

   

the fact that approximately $9 billion of the cash consideration will be funded by a cash dividend distributed by VMware pro rata to all of its stockholders;

 

   

the fact that, with respect to the cash consideration of up to $5 billion that will be funded by additional debt financing of the Company, the Company had obtained $5 billion of committed debt financing to fund such portion of the cash consideration in full and that such additional debt financing was not expected to result in a reduction in the credit ratings of Dell Technologies;

 

   

the fact that each of the board of directors and the Special Committee consulted with representatives of Dell Technologies’ senior management and retained and received advice from their respective outside legal counsel in evaluating and negotiating the terms of the amended merger agreement and the transactions contemplated thereby, including the Class V transaction and the amended and restated Company certificate;

 

   

the course of discussions and negotiations between the board of directors and the Special Committee, which resulted in what the board of directors considers a fair allocation of equity ownership in Dell Technologies across holders of its common stock;

 

   

the projected financial results of Dell Technologies and VMware provided by Dell Technologies’ and VMware’s respective managements, summarized in the proxy statement/prospectus under “Proposal 1—Adoption of the Merger Agreement—Certain Financial Projections” and below under “—Important Information About the Financial Projections”;

 

   

the financial analyses presented by Goldman Sachs on July 1, 2018 of certain potential alternatives to the Class V transaction, including a potential initial public offering of Dell Technologies common stock or a potential business combination between Dell Technologies and VMware, and the benefits and considerations associated with the alternatives;

 

   

the financial analyses presented to the board of directors by Goldman Sachs at its meeting on November 14, 2018;

 

   

the fact that Michael Dell and his affiliated investment entities and the funds affiliated with Silver Lake Partners that have investments in the Company agreed to enter into the Voting and Support Agreement under which Michael Dell, Silver Lake Partners and their affiliated stockholders, who together are the largest holders of the Company’s common stock, and possess a majority of the total voting power of the common stock, irrevocably agreed to vote in favor of the amended merger agreement and the transactions contemplated thereby, to vote against any action that could reasonably be expected to impede, interfere with, delay, postpone or adversely affect the Class V transaction or other transactions contemplated by the amended merger agreement in any material respect and waive any appraisal rights in connection with the merger;

 

   

the fact that, after discussions and negotiations with the Company, and in some cases, the Special Committee, and their respective advisors related to the terms of the amended merger agreement, funds affiliated with Dodge & Cox, Elliott Management, Canyon Partners and Mason Capital Management, which collectively hold approximately 17% of the Class V Common Stock, each agreed to enter into Investor Voting and Support Agreements under which each irrevocably agreed to vote in favor of the amended merger agreement and the transactions contemplated thereby;

 

   

the closing conditions included in the amended merger agreement, including the stockholder approvals having been obtained, the payment of the VMware special dividend, the receipt of the proceeds of the debt

 

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financing, the ability of the dividend and debt financing proceeds to be transferred to the Company, the effectiveness of the Form S-4 Registration Statement, the listing of the Class C Common Stock on the NYSE, the shares of Class C Common Stock to be issued in the Class V transaction not exceeding the number of shares registered under the Form S-4 Registration Statement, no material adverse effect on Dell Technologies or VMware, the accuracy of the Company’s representations and warranties in the amended merger agreement and the performance of the Company’s covenants in all material respects;

 

   

the fact that the Class V transaction will eliminate the complexity associated with the Company’s tracking stock structure, thereby simplifying investment analysis and eliminating potentially differing investment and voting objectives of the stockholder constituencies;

 

   

the ability of the board of directors to withdraw, modify or change its recommendation of the amended merger agreement prior to obtaining the stockholder approvals if the board of directors determines, after consultation with its financial and legal advisors, that the failure to make such a withdrawal, modification or change would reasonably be expected to be inconsistent with the board of directors’ fiduciary responsibilities under applicable law, and the ability of the board of directors to direct the Company to terminate the amended merger agreement in the event of a withdrawal, modification or change of recommendation by the Special Committee;

 

   

the fact that the Class V transaction will result in there being a new class of publicly traded common stock, the Class C Common Stock, that reflects the full business and value of Dell Technologies; and

 

   

the fact that the full board of directors, including members of the Special Committee, unanimously approved the amended merger agreement.

In the course of its deliberations, the board of directors also considered a variety of risks and other potentially negative factors, including the following:

 

   

the possibility that the Class V transaction would likely not yield full synergistic opportunities that could have resulted from a business combination between Dell Technologies and VMware;

 

   

the possibility that the merger effecting the Class V transaction may not be completed or that completion may be unduly delayed for reasons beyond the control of the Company;

 

   

the ability of the Special Committee to withdraw, modify or change its recommendation of the amended merger agreement prior to obtaining the stockholder approvals if the Special Committee determines, after consultation with its financial and legal advisors, that the failure to make such a withdrawal, modification or change would reasonably be expected to be inconsistent with the Special Committee’s fiduciary responsibilities under applicable law, and the ability of the Special Committee to direct the Company to terminate the amended merger agreement in the event of such a withdrawal, modification or change;

 

   

the risk that the VMware special dividend contemplated by the amended merger agreement might not be obtained, resulting in a failure to satisfy the closing conditions in the amended merger agreement and complete the Class V transaction;

 

   

the risk that the $5 billion of committed debt financing might not be obtained, resulting in a failure to satisfy the closing conditions in the amended merger agreement and complete the Class V transaction;

 

   

the risk that the holders of the Class A Common Stock and Class C Common Stock will exercise appraisal rights in connection with the merger (other than the MD stockholders and the MSD Partners stockholders, which have waived such rights);

 

   

the risk that the Company does not obtain the required stockholder approvals;

 

   

the risk that the potential benefits sought in the Class V transaction might not be realized fully, or at all;

 

   

the risk that the pendency of the Class V transaction could result in the disruption of the Company’s business, including the possible diversion of management and employee attention;

 

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the fact that, in connection with the Class V transaction, the Company entered into the VMware Agreement, pursuant to which it agreed that certain requests made by or transactions involving the Company or any of its affiliates will be subject to review by, and a recommendation in favor thereof from, a special committee of the VMware board of directors comprised solely of independent directors as more fully described in the proxy statement/prospectus under “The Merger Agreement—VMware Agreement”; and

 

   

risks of the type and nature described in the proxy statement/prospectus under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” in this supplement under “Update to Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” and in the documents incorporated by reference into the proxy statement/prospectus.

The board of directors considered all of these factors as a whole and, on balance, concluded that they supported a determination to recommend the amended merger agreement, the Class V transaction and the other transactions contemplated by the amended merger agreement, including the amended and restated Company certificate. The foregoing discussion of the information and factors considered by the board of directors is not exhaustive. In view of the wide variety of factors considered by the board of directors in connection with its evaluation of the Class V transaction and other transactions contemplated by the merger agreement and the complexity of these matters, the board of directors did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. The board of directors evaluated the factors described above, among others, and reached a consensus that the merger agreement and the transactions contemplated thereby, including the Class V transaction and the amended and restated Company certificate, were fair to and in the best interests of the Company and its stockholders. In considering the factors described above and any other factors, individual members of the board of directors may have viewed factors differently or given different weight or merit to different factors.

At a meeting held on November 14, 2018, the Special Committee unanimously determined that the amended merger agreement and the transactions contemplated thereby, including the Class V transaction and the adoption of the amended and restated Company certificate, are fair to and in the best interest of the Class V stockholders, and unanimously resolved to recommend that the board of directors approve the merger agreement amendment and the consummation of the transactions contemplated by the amended merger agreement, including the Class V transaction and the amended and restated Company certificate. Later that day, the board of directors held a meeting to discuss the merger agreement and the transactions contemplated thereby. The members of the board of directors that are also members of the Special Committee made their determination as to the advisability of the proposed Class V transaction with respect to the Class V stockholders, and unanimously resolved to recommend that the board of directors adopt the merger agreement amendment and approve the consummation of the Class V transaction and the other transactions contemplated by the amended merger agreement, including the amended and restated Company certificate. The board of directors, other than the members of the Special Committee, then made its determination as to the advisability of the proposed transactions with respect to the holders of the Class A Common Stock, the Class B Common Stock and the Class C Common Stock, and unanimously resolved to recommend that the board of directors adopt the merger agreement amendment and approve the consummation of the Class V transaction and the other transactions contemplated by the amended merger agreement, including the amended and restated Company certificate. The board of directors, as a whole, then resolved by unanimous vote to approve and adopt the merger agreement amendment and the consummation of the Class V transaction and the other transactions contemplated by the amended merger agreement, including the amended and restated Company certificate, and to recommend that all of the Company’s stockholders vote to adopt the amended merger agreement and the transactions contemplated by the amended merger agreement, including the amended and restated Company certificate. On November 14, 2018, following the meeting of the board of directors, the merger agreement amendment was executed by the relevant parties.

Opinion of Evercore Group L.L.C.

At a meeting of the Special Committee held on November 14, 2018, Evercore rendered its oral opinion to the Special Committee, which opinion was subsequently confirmed by delivery of a written opinion dated

 

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November 14, 2018, that, as of the date thereof, and based upon and subject to the factors, procedures, assumptions, qualifications, limitations and conditions set forth in its written opinion, the transaction consideration was fair, from a financial point of view, to the Class V stockholders (other than Dell Technologies and its affiliates).

The full text of Evercore’s written opinion, dated November 14, 2018, which sets forth, among other things, the factors considered, procedures followed, assumptions made and qualifications and limitations on the scope of review undertaken by Evercore in rendering its opinion, is attached as Annex S-D to this supplement and is incorporated by reference in its entirety. Evercore’s opinion was addressed to, and for the information and benefit of, the Special Committee in connection with its evaluation of the Class V transaction. Evercore’s opinion did not address the relative merits or timing of the Class V transaction as compared to other business or financial strategies that might be available to Dell Technologies or the Special Committee, nor did it address the underlying business decision of Dell Technologies or the Special Committee to engage in the Class V transaction or the price at which any shares of Dell Technologies, VMware or any other entity will trade at any time, including following the announcement or completion of the Class V transaction. Evercore’s opinion did not constitute a recommendation to the board of directors, the Special Committee or any other persons in respect of the Class V transaction, including as to how any Class V stockholder should vote or act in respect of the Class V transaction.

In connection with rendering its opinion, Evercore, among other things:

 

   

reviewed certain publicly available business and financial information relating to Dell Technologies and VMware that Evercore deemed to be relevant, including publicly available research analysts’ estimates;

 

   

reviewed certain non-public historical financial statements and other non-public historical financial and operating data relating to Dell Technologies and VMware prepared and furnished to Evercore by management of Dell Technologies or VMware, as applicable;

 

   

reviewed certain alternative business assumptions and an analysis furnished to Evercore by a consultant retained by the Special Committee and which were used at the direction of the Special Committee to prepare the Dell projections sensitivity case, as described in the proxy statement/prospectus under “Proposal 1—Adoption of the Merger AgreementCertain Financial Projections”; such assumptions and analyses addressed (a) certain financial forecasts and other financial and operating data of Dell Technologies (including Dell Technologies management’s assumptions for VMware), (b) certain industry and market research and (c) other information;

 

   

reviewed certain non-public projected financial and operating data relating to Dell Technologies and VMware prepared and furnished to Evercore by management of Dell Technologies or VMware, as applicable, in each case as approved for Evercore’s use by the Special Committee and which are presented in the proxy statement/prospectus under “Proposal 1—Adoption of the Merger AgreementCertain Financial Projections”;

 

   

discussed the operations, financial projections and financial condition of Dell Technologies and VMware with management of Dell Technologies and VMware (including their views on the risks and uncertainties of achieving such projections);

 

   

reviewed the reported trading prices and the historical trading activity of the Class V Common Stock;

 

   

compared the financial performance of Dell Technologies and VMware and, as to VMware, its stock market trading multiples, with the financial performance and stock market trading multiples of certain other publicly traded companies that Evercore deemed relevant;

 

   

considered certain attributes of the Class V Common Stock as provided for in Dell Technologies’ organizational and governance documents and policies that Evercore deemed relevant;

 

   

reviewed the amended merger agreement; and

 

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performed such other analyses and examinations and considered such other factors that Evercore deemed appropriate.

For purposes of its analysis and opinion, Evercore assumed and relied upon, without undertaking any independent verification of, the accuracy and completeness of all of the information publicly available, and all of the information supplied or otherwise made available to, discussed with, or reviewed by Evercore, and Evercore assumed no liability therefor. With respect to the Special Committee approved projections relating to Dell Technologies and VMware referred to in this supplement, Evercore assumed that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of the entity preparing such data as to such future financial performance under the business assumptions reflected therein. With respect to the alternative business assumptions and analysis prepared by a consultant retained by the Special Committee and furnished to Evercore referred to above, Evercore assumed that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the party preparing such data. Evercore expressed no view as to any projected financial data relating to Dell Technologies or VMware, or the assumptions on which they were based.

For purposes of rendering its opinion, Evercore assumed, in all respects material to its analysis, that the representations and warranties of each party contained in the amended merger agreement were true and correct, that each party would perform all of the covenants and agreements required to be performed by it under the amended merger agreement, and that all conditions to the consummation of the Class V transaction would be satisfied without material waiver or modification thereof. Evercore further assumed that all governmental, regulatory or other consents, approvals or releases necessary for the consummation of the Class V transaction would be obtained without any material delay, limitation, restriction or condition that would have an adverse effect on Dell Technologies or the consummation of the Class V transaction or materially reduce the benefits of the Class V transaction to the Class V stockholders. Evercore further assumed that any exercise of appraisal rights, if any, would not affect the value of Dell Technologies or the transaction consideration in any respect material to Evercore’s analysis.

Evercore did not make nor assume any responsibility for making any independent valuation or appraisal of the assets or liabilities of Dell Technologies, VMware or any other entity, nor was Evercore furnished with any such appraisals, nor did Evercore evaluate the solvency or fair value of Dell Technologies, VMware or any other entity under any state or federal laws relating to bankruptcy, insolvency or similar matters. Evercore’s opinion was necessarily based upon information made available to it as of November 14, 2018, and financial, economic, market and other conditions as they existed and as could be evaluated as of that date. Subsequent developments may affect Evercore’s opinion and Evercore does not have any obligation to update, revise or reaffirm its opinion.

The estimates contained in Evercore’s analyses and the results from any particular analysis are not necessarily indicative of future results, which may be significantly more or less favorable than suggested by such analyses. In addition, analyses relating to the value of businesses or assets neither purport to be appraisals nor do they necessarily reflect the prices at which businesses or assets may actually be sold. Accordingly, Evercore’s analyses and estimates are inherently subject to uncertainty.

In arriving at its opinion, Evercore did not attribute any particular weight to any particular analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Several analytical methodologies were employed by Evercore in its analyses, and no one single method of analysis should be regarded as determinative of the overall conclusion reached by Evercore. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the significance of particular techniques. Accordingly, Evercore believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it, without considering all analyses and factors in their entirety, could create a misleading or incomplete view of the evaluation process underlying its opinion. The conclusion reached by Evercore, therefore, is based on the application of Evercore’s experience and judgment to all analyses and factors considered by Evercore, taken as a whole.

 

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Evercore was not asked to pass upon, and expressed no opinion with respect to, any matter other than the fairness to the Class V stockholders (other than Dell Technologies and its affiliates), from a financial point of view, of the transaction consideration. Evercore did not express any view on, and its opinion did not address, the fairness of the Class V transaction to, or any consideration received in connection therewith by, the holders of any other securities, creditors or other constituencies of Dell Technologies, VMware or any other person or entity, or any class of such persons, whether relative to the transaction consideration or otherwise. Evercore assumed that the structure of the Class V transaction would not vary or be modified in any respect material to its analysis. Evercore’s opinion does not address the relative merits or timing of the Class V transaction as compared to other business or financial strategies that might be available to Dell Technologies or the Special Committee, nor does it address the underlying business decision of Dell Technologies or the Special Committee to engage in the Class V transaction, nor does it address the decision of any holder of shares of Dell Technologies to exercise appraisal rights, if any. In arriving at its opinion, Evercore was not authorized to solicit, and did not solicit, interest from any third party with respect to the acquisition of any or all of Dell Technologies or the Class V Common Stock or any business combination or other extraordinary transaction involving Dell Technologies. Evercore’s opinion does not constitute a recommendation to the board of directors, the Special Committee or any other persons in respect of the Class V transaction, including as to how any Class V holder should vote or act in respect of the Class V transaction. Evercore expressed no opinion as to the price at which any shares of Dell Technologies, VMware or any other entity will trade at any time, including following the announcement or completion of the Class V transaction. Evercore is not a legal, regulatory, accounting or tax expert and assumed the accuracy and completeness of assessments by Dell Technologies, the Special Committee and their respective advisors with respect to legal, regulatory, accounting and tax matters.

Set forth below is a summary of the material financial analyses reviewed by Evercore with the Special Committee on November 14, 2018, in connection with rendering its opinion. The following summary, however, does not purport to be a complete description of the analyses performed by Evercore. The order of the analyses described and the results of these analyses do not represent relative importance or weight given to these analyses by Evercore. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data that existed on or before November 14, 2018, and is not necessarily indicative of current market conditions.

The following summary of Evercore’s financial analyses includes information presented in tabular format. In order to fully understand the analyses, the tables should be read together with the full text of each summary. The tables are not intended to stand alone and alone do not constitute a complete description of Evercore’s financial analyses. Considering the tables below without considering the full narrative description of Evercore’s financial analyses, including the methodologies and assumptions underlying such analyses, could create a misleading or incomplete view of such analyses.

Summary of Evercore’s Financial Analysis

Financial Analysis of Dell Technologies

Discounted Cash Flow Analysis

Evercore performed a discounted cash flow analysis to calculate ranges of implied equity values of Dell Technologies as of the end of Dell Technologies’ fiscal 2019 third quarter, which ended November 3, 2018, utilizing estimates of the standalone, unlevered, after-tax free cash flows that Dell Technologies was expected to generate over the period beginning with its fiscal 2019 fourth quarter through fiscal year 2023 under the different projected financial data reflected in each of the updated Dell projections and the Dell projections sensitivity case. Given Dell Technologies’ approximately 32% economic interest in VMware, Evercore also used the discounted cash flow analysis of VMware summarized under “—Financial Analysis of VMware—Discounted Cash Flow Analysis.”

Evercore first calculated ranges of terminal values for Dell Technologies (excluding VMware) under each of the updated Dell projections and the Dell projections sensitivity case using the (1) terminal earnings before

 

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interest, taxes, depreciation and amortization (“EBITDA”) multiple method by applying terminal year enterprise value to EBITDA multiples ranging from 8.5x to 9.5x to estimated fiscal 2023 EBITDA; and (2) perpetuity growth rate method by applying an assumed perpetuity growth rate range of 1.75% to 2.25% (taking into account estimated growth prospects of Dell Technologies, as well as long-term inflation, estimated gross domestic product growth rates and other factors) to estimated terminal year unlevered free cash flow. Evercore then discounted the projected, unlevered free cash flows of Dell Technologies (excluding VMware) over the period beginning with its fiscal 2019 fourth quarter through fiscal year 2023 under each of the updated Dell projections and the Dell projections sensitivity case and the ranges of terminal values for Dell Technologies (excluding VMware) that it calculated using the terminal year EBITDA multiple method and the perpetuity growth rate method under each of the updated Dell projections and the Dell projections sensitivity case to a present value as of November 3, 2018, using discount rates ranging from 9.0% to 10.5%, to derive ranges of implied total enterprise values for Dell Technologies (excluding VMware) under each scenario. The discount rates were based on Evercore’s judgment of the estimated range of weighted average cost of capital of Dell Technologies (excluding VMware), taking into account, among other factors, the impact of estimated cost of equity, cost of debt, tax rates and capital structure. Using these ranges of implied total enterprise values, Evercore subtracted net debt (excluding net debt related to DFS) and the value of minority interests to derive ranges of implied equity values for Dell Technologies (excluding VMware).

Using the values for Dell Technologies (excluding VMware) and values for VMware (described under “—Financial Analysis of VMware—Discounted Cash Flow Analysis”), to account for Dell Technologies’ approximately 32% economic ownership of VMware, Evercore then attributed to Dell Technologies 32% of VMware’s implied equity value ranges. These amounts were then added to the implied equity values for Dell Technologies (excluding VMware) to generate implied equity values for Dell Technologies (including VMware). Those ranges of implied equity values for Dell Technologies (including VMware) were:

 

Scenario

   Implied Equity Value
Reference Ranges
(in billions)
 

Updated Dell Projections—EBITDA Multiple Method

   $ 57.5 – 72.3

Updated Dell Projections—Perpetuity Growth Rate Method

   $ 47.5 – 75.4

Dell Projections Sensitivity Case—EBITDA Multiple Method

   $ 52.4 – 66.4

Dell Projections Sensitivity Case—Perpetuity Growth Rate Method

   $ 42.2 – 68.4

Evercore compared these implied equity values to the implied equity value of Dell Technologies in the Class V transaction of $48.3 billion.

Peer Trading Analysis

In performing a selected peer trading analysis of Dell Technologies, Evercore performed three different analyses: a sum-of-the-parts analysis, an analysis of Dell Technologies (excluding VMware) plus VMware, and an analysis of Dell Technologies on a consolidated basis.

Throughout these analyses, Evercore selected for comparison purposes companies that it considered to be similar to Dell Technologies and its businesses based on such factors as participating in similar lines of businesses and having similar operations, operating in the same industry and serving similar customers, having generally similar financial performance, or having other relevant or generally similar characteristics. None of the selected companies is identical to Dell Technologies or any of its businesses. Accordingly, a complete understanding of the results cannot be limited to a quantitative analysis of such results; rather, such understanding necessarily involves complex considerations and judgments concerning the differences in the financial and operating characteristics of the selected companies compared to those of Dell Technologies and its businesses. In evaluating the peer companies selected, Evercore made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions, and other matters, many of which are beyond the control of Dell Technologies or its businesses. Mathematical analysis is not in itself a meaningful method of using peer company trading data.

 

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Sum-of-the-Parts

Evercore summed the values of each of Dell Technologies’ businesses: Client Solutions Group (CSG), Infrastructure Solutions Group (ISG), Boomi, RSA Security, Virtustream, Pivotal, SecureWorks and VMware. Evercore reviewed and compared certain financial, operating and market information relating to each of these businesses to corresponding information of the publicly traded companies listed in the table below, which Evercore deemed most relevant to consider in relation to these businesses. Evercore made these determinations based on its professional judgment and experience because they are public companies with operations that for purposes of this analysis Evercore considered similar to the operations of the respective businesses of Dell Technologies. For each entity where Dell Technologies owns less than 100% of the applicable entity, Dell Technologies’ percentage ownership in the applicable entity was applied to the enterprise value range of the peers of the applicable entity to derive the value attributed to Dell Technologies for that entity.

 

Business

  

Selected Public Company Peers

CSG

  

•  Acer Inc.

•  Asustek Computer Inc.

•  Fujitsu Limited

  

•  HP Inc.

•  Lenovo Group Ltd.

ISG

  

•  Cisco Systems, Inc.

•  Fujitsu Limited

•  Hitachi, Ltd.

•  Hewlett Packard Enterprise Company

  

•  International Business Machines Corporation

•  NetApp, Inc.

•  Oracle Corporation

RSA Security

  

•  CA, Inc.1

•  Check Point Software Technologies Ltd.

•  FireEye, Inc.

  

•  OneSpan Inc. (formerly VASCO Data Security International Inc.)

•  VeriSign, Inc.

Virtustream, Boomi and Pivotal

  

•  Alteryx, Inc.

•  Cloudera, Inc.

•  MongoDB, Inc.

  

•  Okta, Inc.

•  Talend S.A.

•  Twilio Inc.

SecureWorks

  

•  Check Point Software Technologies Ltd.

•  FireEye, Inc.

•  Fortinet, Inc.

  

•  Imperva, Inc.

•  Palo Alto Networks, Inc.

•  Rapid7, Inc.

VMware

  

•  CA, Inc.1

•  Citrix Systems, Inc.

•  Microsoft Corporation

  

•  Oracle Corporation

•  Red Hat, Inc.1

•  SAP SE

 

(1)

Information for this company is on an unaffected basis to exclude the impact of this company’s recent strategic transaction.

For CSG and ISG, Evercore reviewed, among other things, enterprise value of the selected companies as a multiple of estimated EBITDA for fiscal years 2019 and 2020. For RSA Security, Boomi, Virtustream, Pivotal and SecureWorks, Evercore reviewed, among other things, enterprise value of the selected companies as a multiple of estimated revenue for fiscal years 2019 and 2020. For VMware, Evercore reviewed, among other things, enterprise value of the selected companies as a multiple of estimated EBITDA and equity value of the selected companies as a multiple of net income (“P/E”), in each case for fiscal years 2019 and 2020. Enterprise values were calculated for the purpose of this analysis as equity value (based on the per share closing price of each selected company on November 13, 2018, multiplied by the fully diluted number of such company’s outstanding equity securities on such date), plus debt, plus minority interest, less cash and cash equivalents (in the case of debt, minority interest, cash and cash equivalents, as set forth on the most recently publicly available balance sheet of such company, and in the case of minority interest, where applicable). The financial data of the

 

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selected peer companies used by Evercore for this analysis were based on publicly available research analysts’ estimates. The following table summarizes the relevant multiple ranges of each of the businesses applied for fiscal years 2019 and 2020:

 

          FY2019E      FY2020E  

Business

   Methodology    Low      High      Low      High  

CSG

   EBITDA      6.8x        8.8x        6.0x        8.0x  

ISG

   EBITDA      7.0x        9.0x        6.5x        8.5x  

RSA Security

   Revenue      5.0x        7.0x        4.7x        6.7x  

Boomi, Virtustream and Pivotal

   Revenue      8.0x        10.0x        6.0x        8.0x  

SecureWorks

   Revenue      2.0x        4.0x        1.5x        3.5x  

VMware

   EBITDA      13.0x        15.0x        12.0x        14.0x  

VMware

   P/E      20.0x        24.0x        18.0x        22.0x  

Evercore used the low and high values as a reference range and applied that range to the estimated EBITDA, revenue or earnings, as applicable, for each business for fiscal years 2019 and 2020. This analysis indicated the following implied equity value of Dell Technologies:

 

Scenario

   Implied Equity Value
Reference Ranges
(in billions)
 

Updated Dell Projections—Fiscal 2019

   $ 36.9 – 57.4  

Updated Dell Projections—Fiscal 2020

   $ 36.3 – 58.9  

Dell Projections Sensitivity Case—Fiscal 2019

   $ 35.8 – 55.9  

Dell Projections Sensitivity Case—Fiscal 2020

   $ 35.4 – 57.8  

Evercore compared these implied equity values to the implied equity value of Dell Technologies in the Class V transaction of $48.3 billion.

Dell Technologies (Excluding VMware) Plus VMware

Evercore reviewed and compared certain financial, operating and market information relating to these businesses to corresponding information of the publicly traded companies listed in the table below, which Evercore deemed most relevant to consider in relation to these businesses. Evercore made this determination based on its professional judgment and experience because they are public companies with operations that for purposes of this analysis Evercore considered similar to the operations of the respective businesses. Evercore then summed the implied equity value of Dell Technologies (excluding VMware) and, to account for Dell Technologies’ approximately 32% economic ownership of VMware, 32% of the implied equity value of VMware.

 

Business Entity

  

Selected Public Company Peers

Dell Technologies (excluding VMware)

  

•  Cisco Systems, Inc.

•  HP Inc.

•  Hewlett Packard Enterprise Company

  

•  International Business Machines Corporation

•  NetApp, Inc.

•  Oracle Corporation

VMware

  

•  CA, Inc.1

•  Citrix Systems, Inc.

•  Microsoft Corporation

  

•  Oracle Corporation

•  Red Hat, Inc.1

•  SAP SE

 

(1)

Information for this company is on an unaffected basis to exclude the impact of this company’s recent strategic transaction.

For Dell Technologies (excluding VMware) and VMware, Evercore reviewed, among other things, enterprise value of the selected companies as a multiple of estimated EBITDA for fiscal years 2019 and 2020.

 

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For VMware, Evercore reviewed, among other things, enterprise value of the selected companies as a multiple of estimated EBITDA and P/E, in each case for fiscal years 2019 and 2020. Enterprise values were calculated for the purpose of this analysis as equity value (based on the per share closing price of each selected company on November 13, 2018, multiplied by the fully diluted number of such company’s outstanding equity securities on such date), plus debt, plus minority interest, less cash and cash equivalents (in the case of debt, minority interest, cash and cash equivalents, as set forth on the most recently publicly available balance sheet of such company, and in the case of minority interest, where applicable). The financial data of the selected peer companies used by Evercore for this analysis were based on publicly available research analysts’ estimates. The following table summarizes the relevant multiple ranges of each of the businesses applied for fiscal years 2019 and 2020:

 

          FY2019E      FY2020E  

Business Entity

   Methodology    Low      High      Low      High  

Dell Technologies (excluding VMware)

   EBITDA      8.5x        10.5x        8.3x        10.3x  

VMware

   EBITDA      13.0x        15.0x        12.0x        14.0x  

VMware

   P/E      20.0x        24.0x        18.0x        22.0x  

Evercore used the low and high values as a reference range and applied that range to the estimated EBITDA or P/E, as applicable, for Dell Technologies (excluding VMware) and VMware for fiscal years 2019 and 2020. This analysis indicated the following implied equity value of Dell Technologies (excluding VMware) plus 32% of the implied equity value of VMware:

 

Scenario

   Implied Equity Value
Reference Ranges
(in billions)
 

Updated Dell Projections—Fiscal 2019

   $ 32.4 – 47.8  

Updated Dell Projections—Fiscal 2020

   $ 36.3 – 53.1  

Dell Projections Sensitivity Case—Fiscal 2019

   $ 30.9 – 46.0  

Dell Projections Sensitivity Case—Fiscal 2020

   $ 35.1 – 51.6  

Evercore compared these implied equity values to the implied equity value of Dell Technologies in the Class V transaction of $48.3 billion.

Dell Technologies on a Consolidated Basis

Evercore analyzed the value of Dell Technologies on a consolidated basis, including its 32% economic ownership of VMware. Evercore reviewed and compared certain financial, operating and market information relating to these businesses to corresponding information of the publicly traded companies listed in the table below, which Evercore deemed most relevant to consider in relation to Dell Technologies on a consolidated basis. Evercore made this determination based on its professional judgment and experience because they are public companies with operations that for purposes of this analysis Evercore considered similar to the operations of Dell Technologies on a consolidated basis.

 

Business Entity

  

Selected Public Company Peers

Dell Technologies on a consolidated basis

  

•  Cisco Systems, Inc.

•  HP Inc.

•  Hewlett Packard Enterprise Company

  

•  International Business Machines Corporation

•  NetApp, Inc.

•  Oracle Corporation

VMware

  

•  CA, Inc.1

•  Citrix Systems, Inc.

•  Microsoft Corporation

  

•  Oracle Corporation

•  Red Hat, Inc.1

•  SAP SE

 

(1)

Information for this company is on an unaffected basis to exclude the impact of this company’s recent strategic transaction.

 

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For Dell Technologies on a consolidated basis, Evercore reviewed, among other things, enterprise value of the selected companies as a multiple of estimated EBITDA for fiscal years 2019 and 2020. Enterprise values were calculated for the purpose of this analysis as equity value (based on the per share closing price of each selected company on November 13, 2018, multiplied by the fully diluted number of such company’s outstanding equity securities on such date), plus debt, plus minority interest, less cash and cash equivalents (in the case of debt, minority interest, cash and cash equivalents, as set forth on the most recently publicly available balance sheet of such company, and in the case of minority interest, where applicable). The financial data of the selected peer companies used by Evercore for this analysis was based on publicly available research analysts’ estimates. The following table summarizes the enterprise value of Dell Technologies on a consolidated basis as a multiple of estimated EBITDA for fiscal years 2019 and 2020:

 

          FY2019E      FY2020E  

Business Entity

   Methodology    Low      High      Low      High  

Dell Technologies on a consolidated basis

   EBITDA      9.0x        11.0x        8.5x        10.5x  

Evercore used the low and high values as a reference range and applied that range to the estimated EBITDA for Dell Technologies on a consolidated basis for fiscal years 2019 and 2020. This analysis indicated the following implied equity value of Dell Technologies on a consolidated basis:

 

Scenario

   Implied Equity Value
Reference Ranges
(in billions)
 

Updated Dell Projections—Fiscal 2019

   $ 32.2 – 46.4

Updated Dell Projections—Fiscal 2020

   $ 34.8 – 50.4

Dell Projections Sensitivity Case—Fiscal 2019

   $ 30.6 – 44.5

Dell Projections Sensitivity Case—Fiscal 2020

   $ 33.6 – 48.9

Evercore compared these implied equity values to the implied equity value of Dell Technologies in the Class V transaction of $48.3 billion.

Financial Analysis of VMware

Discounted Cash Flow Analysis

Evercore performed a discounted cash flow analysis to calculate ranges of implied equity values of VMware as of the end of VMware’s fiscal 2019 third quarter, which ended November 3, 2018, utilizing estimates of the standalone, unlevered, after-tax free cash flows that VMware was expected to generate over the period beginning with its fiscal 2019 fourth quarter through fiscal year 2022 under different projected financial data reflected in each of the VMware projections, an analyst consensus case for VMware, and the Dell management VMware projections.

Evercore first calculated ranges of terminal values for VMware under each of the VMware projections, analyst consensus case for VMware, and Dell management VMware projections using the (1) terminal year EBITDA multiple method by applying terminal year enterprise value to EBITDA multiples ranging from 13.0x to 15.0x to estimated fiscal 2022 EBITDA; and (2) perpetuity growth rate method by applying an assumed perpetuity growth rate range of 3.00% to 4.00% (taking into account estimated growth prospects of VMware as well as long-term inflation, estimated gross domestic product growth rates and other factors) to estimated terminal unlevered free cash flow. Evercore then discounted VMware’s projected, unlevered free cash flows over the period beginning with its fiscal 2019 fourth quarter through fiscal year 2022 under each of the VMware projections, an analyst consensus case for VMware, and the Dell management VMware projections and the ranges of terminal values for VMware that it calculated using the terminal year EBITDA multiple method and the perpetuity growth rate method under each of the VMware projections, an analyst consensus case for VMware, and the Dell management VMware projections to a present value as of November 3, 2018, using discount rates ranging from 8.0% to 10.0%, to derive ranges of implied total enterprise values for VMware under

 

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each scenario. The discount rates were based on Evercore’s judgment of the estimated range of VMware’s weighted average cost of capital, taking into account, among other factors, the impact of estimated cost of equity, cost of debt, tax rates and capital structure. Using these ranges of implied total enterprise values, Evercore added net cash and minority interest to derive ranges of implied equity values for VMware. Based on these ranges of implied equity values, Evercore calculated a range of implied equity values for VMware under each of the scenarios described above as follows:

 

Scenario

   Implied Equity Value
Reference Ranges
(in billions)
 

VMware Projections—EBITDA Multiple Method

   $ 63.3 – 73.5

VMware Projections—Perpetuity Growth Rate Method

   $ 47.5 – 72.7

Analyst Consensus Case for VMware—EBITDA Multiple Method

   $ 61.1 – 70.7

Analyst Consensus Case for VMware—Perpetuity Growth Rate Method

   $ 45.6 – 68.6

Dell Management VMware Projections—EBITDA Multiple Method

   $ 60.6 – 70.2

Dell Management VMware Projections—Perpetuity Growth Rate Method

   $ 47.8 –73.1

Peer Trading Analysis

Evercore reviewed and compared certain financial, operating and market information relating to VMware to corresponding information of the publicly traded companies listed in the table below, which Evercore deemed most relevant to consider in relation to VMware. Evercore made this determination based on its professional judgment and experience because they are public companies with operations that for purposes of this analysis Evercore considered similar to the operations of VMware.

 

VMware

  

•  CA, Inc.1

•  Citrix Systems, Inc.

•  Microsoft Corporation

  

•  Oracle Corporation

•  Red Hat, Inc.1

•  SAP SE

 

(1)

Information for this company is on an unaffected basis to exclude the impact of this company’s recent strategic transaction.

For VMware, Evercore reviewed, among other things, enterprise value of the selected companies as a multiple of estimated EBITDA and equity value of the selected companies as a multiple of net income (“P/E”), in each case for fiscal years 2019 and 2020. Enterprise values were calculated for the purpose of this analysis as equity value (based on the per share closing price of each selected company on November 13, 2018, multiplied by the fully diluted number of such company’s outstanding equity securities on such date), plus debt, plus minority interest, less cash and cash equivalents (in the case of debt, minority interest, cash and cash equivalents, as set forth on the most recently publicly available balance sheet of such company, and in the case of minority interest, where applicable). The financial data of the selected peer companies used by Evercore for this analysis were based on publicly available research analysts’ estimates. The following table summarizes the relevant multiple ranges for fiscal years 2019 and 2020:

 

          FY2019E      FY2020E  

Business Entity

   Methodology    Low      High      Low      High  

VMware

   EBITDA      13.0x        15.0x        12.0x        14.0x  

VMware

   P/E      20.0x        24.0x        18.0x        22.0x  

 

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Evercore used the low and high values as a reference range and applied that range to the estimated EBITDA or P/E, as applicable, for VMware for fiscal years 2019 and 2020. This analysis indicated the following implied equity value of VMware:

 

Scenario

   Implied Equity Value
Reference Ranges
(in billions)
 

VMware Projections—Fiscal 2019—EBITDA Method

   $ 53.6 – 60.3  

VMware Projections—Fiscal 2020—EBITDA Method

   $ 54.8 – 62.3  

Analyst Consensus Case for VMware—Fiscal 2019—EBITDA Method

   $ 57.2 – 64.4  

Analyst Consensus Case for VMware—Fiscal 2020—EBITDA Method

   $ 55.5 – 63.1  

Dell Management VMware Projections—Fiscal 2019—EBITDA Method

   $ 51.6 – 58.1  

Dell Management VMware Projections—Fiscal 2020—EBITDA Method

   $ 53.5 – 60.8  

VMware Projections—Fiscal 2019—P/E Method

   $ 49.9 – 59.8  

VMware Projections—Fiscal 2020—P/E Method

   $ 50.5 – 61.6  

Analyst Consensus Case for VMware—Fiscal 2019—P/E Method

   $ 51.6 – 61.8  

Analyst Consensus Case for VMware—Fiscal 2020—P/E Method

   $ 49.8 – 60.7  

Dell Management VMware Projections—Fiscal 2019—P/E Method

   $ 50.2 – 60.1  

Dell Management VMware Projections—Fiscal 2020—P/E Method

   $ 51.4 – 62.6  

Precedent Tracking Stock Analysis

Evercore performed an analysis of selected tracking stocks to calculate various implied ranges of per share values for the Class V Common Stock.

To compare tracking stock discounts, Evercore looked for tracking stocks that, like the Class V Common Stock, are tracking stocks that currently track a publicly listed subsidiary of the parent company. Evercore determined that Liberty Media’s SiriusXM tracking stock is the only tracking stock that meets this criterion. To compare tracking stock conversion premiums, Evercore selected tracking stocks that were no longer trading but had converted into parent company shares. None of the selected tracking stocks is identical to the Class V Common Stock. Accordingly, a complete understanding of the results cannot be limited to a quantitative analysis of such results; rather, such understanding necessarily involves complex considerations and judgments concerning the differences in the financial and operating characteristics of the selected tracking stocks compared to those of the Class V Common Stock. In evaluating the tracking stocks selected, Evercore made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions, and other matters, many of which are beyond the control of Dell Technologies. Mathematical analysis is not in itself a meaningful method of using peer company trading data.

Precedent Tracking Stock Discount

Evercore calculated the average discount of the Liberty Media SiriusXM tracking stock over time to SiriusXM stock, the underlying equity. This discount ranged since inception from approximately 18.0% to 33.0%. Evercore deemed the Liberty SiriusXM tracking stock as most relevant to consider in relation to the Class V Common Stock. Evercore applied the discount range of 18.0% to 33.0% to the trading price of VMware common stock at the close of the market on various dates and the range of values determined from the VMware financial analysis discussed above. This analysis is intended to apply a discount to the approximately 49% interest in VMware represented by the Class V Common Stock. This analysis yielded the following implied per share ranges:

 

     Metric      Implied Per Share Value
of the Class V Common
Stock(1)
 

VMware’s 52-Week Trading Range as of November 13, 2018

   $ 108.46 – 162.65      $ 73.65 – 135.18  

VMware’s Current Price as of November 13, 2018

   $ 150.51      $ 102.21 – 125.09  

VMware’s Unaffected Price as of January 25, 2018

   $ 137.63      $ 93.46 – 114.39  

Based on Assessment of VMware’s Valuation(2)

   $ 106.90 – 171.99      $ 72.60 – 142.95  

 

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(1)

Share price amounts adjusted to reflect the difference between the number of VMware shares attributable to the Class V Common Stock and the number of shares of Class V Common Stock held by Class V stockholders.

(2)

Represents the minimum and maximum value determined from the VMware valuation discussed above.

Evercore compared these implied per share values with the implied per share value of the Class V Common Stock in the Class V transaction of $120.00.

Precedent Conversion Premia

Evercore calculated the conversion premia associated with the following tracking stocks that had converted into parent company shares. Evercore also analyzed the conversion premia associated with various tracking stocks. Those tracking stocks were:

 

Tracking Stock

  

Premium Percentage at Conversion

Rainbow Media / Cablevision Systems Corporation

  

+10% premium to trailing 20-day average

University of Phoenix Online / Apollo Group, Inc.

  

+10% premium to trailing 20-day average ending 5 days prior to announcement

Go.com / Walt Disney Company

  

+20% premium to trailing 20-day average ending 15 days prior to announcement

Biosurgery and Molecular Oncology / Genzyme Corporation

  

+30% premium to trailing 20-day average

Sprint PCS / Sprint FON

  

+4.6% implied premium

Consumers Gas / CMS Energy

  

+15% premium to trailing 20-day average ending 30 days prior to announcement

Burlington Air and Brink’s Company / Pittston Services Group Inc.

  

+15% premium to trailing 10-day average ending 30 days prior to announcement

Evercore deemed these tracking stocks as most relevant to consider in relation to the Class V Common Stock.

Evercore applied a premium range of 10.0% to 30.0%, based on the premia of precedent tracking stock conversions, to the current and unaffected trading prices of the Class V Common Stock. Applying such range of premiums resulted in the following ranges of the per share values for the Class C Common Stock:

 

     Metric      Implied Per Share Value
of the Class V Common
Stock(1)
 

Unaffected Price as of January 25, 2018

   $ 88.44      $ 97.28 – 114.97  

Current Price as of June 29, 2018

   $ 84.58      $ 93.04 – 109.95  

 

(1)

Share price amounts adjusted to reflect the difference between the number of VMware shares attributable to the Class V Common Stock and the number of shares of Class V Common Stock held by Class V stockholders.

Evercore compared these implied per share values with the implied per share value of the Class V Common Stock in the Class V transaction of $120.00.

Other Factors

Evercore also reviewed and considered other information and analyses. These included, among other things, the latest 52-week trading range (as of November 13, 2018) of the VMware common stock, analyst price targets

 

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for the VMware common stock (as of November 13, 2018), the latest 52-week trading range (as of November 13, 2018) of the Class V Common Stock, the all-time low and high trading prices of the Class V Common Stock, and the potential for the Class V stockholders receiving the share consideration to participate in the recapture of a portion of the Class V Common Stock tracking stock discount as a result of their ownership of shares of Class C Common Stock following completion of the Class V transaction. None of the foregoing constituted a valuation methodology for purposes of Evercore’s financial analysis, and was referenced for informational purposes only.

Last 52-Week Trading Range for VMware Common Stock

Evercore reviewed historical trading prices of the VMware common stock during the latest 52-week trading range (as of November 13, 2018), and observed that the low and high closing prices during such period were $108.46 and $162.65, respectively.

VMware Analyst Price Targets for VMware Common Stock

Evercore reviewed publicly available share price targets of research analysts’ estimates for VMware common stock (as of November 13, 2018), and observed that the low and high price targets per share were $115.00 and $190.00, respectively.

Last 52-Week Trading Range for Class V Common Stock

Evercore reviewed historical trading prices of the Class V Common Stock during the latest 52-week trading range (as of November 13, 2018), and observed that the low and high closing prices during such period were $65.62 and $101.57, respectively.

All-Time Low and High Trading Prices

Evercore reviewed historical trading prices of the Class V Common Stock as of November 13, 2018, and observed that the all-time low and all-time high closing prices were $40.00 and $101.57, respectively.

Class V Common Stock Tracking Stock Discount Recapture

Evercore observed that the Class V Common Stock traded at a discount to VMware. Evercore considered the potential for the Class V stockholders receiving the share consideration to participate in the recapture of a portion of this discount as a result of their ownership of shares of Class C Common Stock following completion of the Class V transaction. Based on an implied equity value of Dell Technologies (including its approximately 32% economic interest in VMware) of $48.3 billion and a volume weighted average trading price of the Class V Common Stock during the 17-day trading period ending on the election deadline of $120.00, Evercore observed the following:

 

     All Stock
Consideration
     $14 billion Cash
Consideration
and Stock
 

Aggregate Class V Common Stock Equity Value Recapture

   $ 2.1 billion      $ 1.1 billion  

Implied Class V Common Stock Price (including recapture)

   $ 130.78      $ 133.37  

Miscellaneous

The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by Evercore. In connection with the review of the Class V transaction by the Special Committee, Evercore performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary described above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Evercore’s opinion. In arriving at its fairness determination, Evercore considered the results of all the

 

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analyses and did not draw, in isolation, conclusions from or with regard to any one analysis or factor considered by it for purposes of its opinion. Rather, Evercore made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all the analyses. In addition, Evercore may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above should not be taken to be the view of Evercore with respect to the actual value of the shares of Class V Common Stock. Several analytical methodologies were employed by Evercore in its analyses, and no one single method of analysis should be regarded as determinative of the overall conclusion reached by Evercore. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the significance of particular techniques. Further, Evercore’s analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies used, including judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Dell Technologies, VMware or their respective advisors. Accordingly, Evercore believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it, without considering all analyses and factors in their entirety, could create a misleading or incomplete view of the evaluation process underlying its opinion. The conclusion reached by Evercore, therefore, is based on the application of Evercore’s experience and judgment to all analyses and factors considered by Evercore, taken as a whole.

Evercore prepared these analyses for the purpose of providing an opinion to the Special Committee as to the fairness, from a financial point of view, of the transaction consideration to the Class V stockholders (other than Dell Technologies and its affiliates). These analyses do not purport to be appraisals or to necessarily reflect the prices at which any business or securities actually may be sold. Any estimates contained in these analyses are not necessarily indicative of actual future results, which may be significantly more or less favorable than those suggested by such estimates. In addition, analyses relating to the value of businesses or assets neither purport to be appraisals nor do they necessarily reflect the prices at which businesses or assets may actually be sold. Accordingly, estimates used in, and the results derived from, Evercore’s analyses are inherently subject to uncertainty, and Evercore assumes no responsibility if future results are materially different from those forecasted in such estimates.

The consideration payable in the Class V transaction was determined through arm’s-length negotiations between Dell Technologies and the Special Committee, and was recommended by the Special Committee and approved by the Dell Technologies board of directors. Evercore provided advice to the Special Committee during these negotiations. Evercore did not, however, recommend any specific amount of consideration to the Special Committee or that any specific amount of consideration constituted the only appropriate consideration for the Class V transaction.

The issuance of the fairness opinion was approved by an Opinion Committee of Evercore.

Pursuant to the terms of Evercore’s engagement letter with the Special Committee, Evercore is entitled to receive a fee of up to $20 million in connection with the Class V transaction, of which $13 million was payable upon the public announcement of Dell Technologies’ entry into a definitive agreement for a transaction subject to the approval of the Special Committee. Of this $13 million, $6 million was payable upon the delivery of Evercore’s prior opinion dated July 1, 2018, with this amount being creditable against the announcement fee to the extent previously paid. No additional fee was payable upon the delivery of Evercore’s opinion dated November 14, 2018. The remaining amount of the fee payable to Evercore is a discretionary amount of up to $7 million and is payable upon the earlier of consummation of a transaction subject to the approval of the Special Committee and six months following the public announcement of such transaction. The final amount of the discretionary fee will be determined by the Special Committee in its sole and absolute discretion and will be based upon, among other things, the resources expended by Evercore in the course of the assignment, the Special Committee’s satisfaction with the services rendered and the benefit to the Class V stockholders of the successful

 

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conclusion of the assignment. Subject to certain limitations specified in the engagement letter, Dell Technologies has agreed to reimburse Evercore for its reasonable out-of-pocket expenses (including legal fees, expenses and disbursements) and to indemnify Evercore for certain liabilities arising out of its engagement.

During the two-year period prior to the delivery of its opinion dated November 14, 2018, and other than as described in the preceding paragraph, no material relationship existed between Evercore and its affiliates and Dell Technologies or its affiliates (other than Silver Lake Partners and its affiliates and portfolio companies) pursuant to which compensation was received by Evercore or its affiliates as a result of such a relationship. During the two-year period prior to the date of its written opinion, Evercore and its affiliates have also provided financial services to Silver Lake Partners, a significant stockholder of Dell Technologies, and its affiliates and portfolio companies, for which Evercore received fees, including the reimbursement of expenses, in an amount equal to approximately $8.2 million in the aggregate for unrelated mandates. Evercore may provide financial or other services to Dell Technologies in the future and in connection with any such services Evercore may receive compensation.

Evercore and its affiliates engage in a wide range of activities for their own accounts and the accounts of customers. In connection with these businesses or otherwise, Evercore and its affiliates and their respective employees, as well as investment vehicles in which any of them may have a financial interest, may at any time, directly or indirectly, hold long or short positions and may trade or otherwise effect transactions for their own accounts or the accounts of customers, in debt or equity securities, senior loans and derivative products relating to Dell Technologies and its affiliates (including VMware), for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities or instruments.

The Special Committee engaged Evercore to act as a financial advisor based on Evercore’s qualifications, experience, reputation and ability to act independently of Dell Technologies and its affiliates. Evercore is an internationally recognized investment banking firm and is regularly engaged in the valuation of businesses in connection with Class V transactions and acquisitions, leveraged buyouts, competitive biddings, private placements and valuations for corporate and other purposes.

Special Cash Dividend by VMware

In connection with the merger agreement amendment, the board of directors of VMware reaffirmed its declaration of a conditional $11 billion one-time special cash dividend, referred to herein as the VMware special dividend, which will be distributed pro rata to holders of VMware common stock. The VMware special dividend is payable in connection with the satisfaction of conditions to the closing of the merger and certain other conditions described in the proxy statement/prospectus, and its payment is a condition to the closing of the merger.

Record Date; Payment Date

The dividend committee of the board of directors of VMware, which was established by the board of directors of VMware and to which authority to establish a new record date and payment date was delegated, has changed the record date for the VMware special dividend. The VMware special dividend, subject to the conditions to payment described in the proxy statement/prospectus, including the additional conditions added pursuant to the merger agreement amendment, will be payable to VMware stockholders of record as of (1) the business day following the election deadline (or if such business day is December 24th or December 31st, the next succeeding business day), provided such day is at least eight calendar days following the later of (A) the date on which the Company issues a public announcement that the requisite stockholder approvals for the Class V transaction have been obtained, and (B) the date on which the shares of Class C Common Stock have been approved for listing on the NYSE, subject to official notice of issuance and compliance by the Company with all applicable listing standards on the date on which such shares begin trading on the NYSE or (2) any other date which the dividend committee of the board of directors of VMware may establish for the VMware special dividend with the approval of the Company (provided that the dividend committee may establish such other date

 

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only if it acts prior to the date that, absent such action, would otherwise be established as the record date for the VMware special dividend). Any date determined in accordance with (1) or (2) of the immediately preceding sentence is referred to herein as the VMware special dividend record date. Subject to conditions described in the proxy statement/prospectus, payment of the VMware special dividend will be made on (1) the business day immediately following the VMware special dividend record date, subject to the Company providing a certification to VMware that if the Company’s pro rata share of the VMware special dividend is received by the Company’s subsidiaries who are holders of record of VMware common stock by 3:30 p.m. Eastern time on such date, the closing of the Class V transaction will occur on such date (provided that if payment to the Company’s subsidiaries holding of record of VMware common stock cannot occur prior to 3:30 p.m. Eastern time, the VMware special dividend will be paid on the next business day) or (2) any other date which the VMware dividend committee of the VMware board of directors may establish as the payment date for the VMware special dividend with the approval of the Company, provided that the dividend committee may establish such other date only if it acts prior to the date that, absence such action, would otherwise be established as the payment date for the VMware special dividend.

Interests of Certain Directors and Officers

Treatment of Independent Director Equity Awards

In considering the recommendation of the board of directors with respect to the transaction, Dell Technologies stockholders also should be aware of the effect of the transaction on the following compensation arrangements of our independent directors. All of the equity compensation described below was granted to independent members of the board of directors under the Management Equity Plan and paid under our independent director compensation program.

Treatment of Deferred Stock Units

As of October 15, 2018, our independent directors held vested deferred stock units with respect to a total of 11,782 shares of common stock, including 3,940 deferred stock units that settle in shares of Class V Common Stock, referred to herein as Class V DSU awards.

The following table sets forth the approximate number of new deferred stock unit awards for Class C Common Stock, referred to herein as a Class C DSU awards, each independent director will be entitled to receive in connection with the completion of the Class V transaction in replacement for vested Class V DSU awards, which will be cancelled. For additional information about the treatment of Class V DSU awards, and for the treatment of related dividends or dividend equivalents, see “—Treatment of Equity Awards.”

 

Name

   Number of Class V
DSU Awards
(Before Class V
Transaction)
     Number of Class C
DSU Awards Issued
With Respect to
Class V DSU
Awards – Minimum
Exchange Ratio (After
Class V
Transaction)
     Number of Class C
DSU Awards Issued
With Respect to
Class V DSU
Awards – Maximum
Exchange Ratio (After
Class V
Transaction)
 

David W. Dorman

     1,261        1,896        2,286  

William D. Green

     —          —          —    

Ellen J. Kullman

     2,679        4,028        4,855  

Treatment of Stock Options

As of October 15, 2018, our independent directors hold vested and unvested stock options to acquire an aggregate of 279,141 shares of Dell Technologies common stock, including stock options to acquire an aggregate of 129,114 shares of Class V Common Stock, referred to herein as Class V stock options.

The following table sets forth the approximate number of stock options to acquire shares of Class C Common Stock, referred to herein as Class C stock options, each independent director will be entitled to receive

 

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in connection with the completion of the Class V transaction in replacement for vested and unvested Class V stock options, which will be cancelled. For additional information about the treatment of Class V stock options, see “—Treatment of Equity Awards” below.

 

Name

   Number of Class V
Stock Options (Before
Class V
Transaction)
     Number of Class C
Stock Options Issued
With Respect to Class V
Stock Options  –
Minimum
Exchange Ratio (After
Class V Transaction)
     Number of Class C
Stock Options Issued
With Respect to Class V
Stock Options  –
Maximum
Exchange Ratio (After
Class V Transaction)
 

David W. Dorman

     43,038        64,741        78,026  

William D. Green

     43,038        64,741        78,026  

Ellen J. Kullman

     43,038        64,741        78,026  

Accounting Treatment

The merger and Class V transaction will be accounted for as a hybrid liability and equity transaction involving the repurchase of outstanding common stock, with the consideration consisting of a variable combination of cash and shares. Upon settlement, the accounting for the Class V transaction will reflect that the outstanding Class V Common Stock will be cancelled and converted into the right to receive shares of Class C Common Stock or $120.00 per share in cash or combination of cash and shares, dependent on each holder’s election and subject to proration of the aggregate cash consideration. The variable nature of the cash obligation to repurchase the shares of Class V Common Stock may require the Company to settle a portion of the shares in exchange for cash and therefore is accounted for as a financial instrument with a potential mark-to-market adjustment for the change in fair value from the date of the stockholder meeting to the election deadline. After the election deadline (following which the final proration and exchange ratio will be determined), the transaction will be accounted for as an equity transaction.

Treatment of Equity Awards

The increase to the exchange ratio under the amended merger agreement described in this supplement under “Update to the Merger Agreement—Transaction Consideration and Elections” also applies to the exchange ratio used to convert the Class V Common Stock-based equity awards. Therefore, all of the outstanding stock options, restricted stock units and deferred stock units covering shares of Class V Common Stock held by our independent directors at the time the Class V transaction is completed will be converted into similar awards covering shares of Class C Common Stock at the effective time of the merger at the same applicable exchange ratio, and not at the previous exchange ratio of 1.3665.

Financing of the Increased Maximum Aggregate Amount of Cash Consideration

Dell has entered into a debt commitment letter, dated November 14, 2018, and as otherwise amended from time to time, referred to herein as the debt commitment letter, with Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank PLC, Citigroup Global Markets Inc., Citibank, N.A., Citicorp USA, Inc., Citicorp North America, Inc., Credit Suisse AG, Cayman Islands Branch, Credit Suisse Loan Funding LLC, Goldman Sachs Bank, USA, JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc., Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc., Royal Bank of Canada, RBC Capital Markets, UBS AG, Stamford Branch, and UBS Securities LLC (collectively referred to herein, together with the other lenders under the incremental term loan facility, as the lenders), providing for, upon the terms and subject to the conditions set forth in the debt commitment letter, incremental debt financing under the credit agreement (the facilities thereunder referred to herein as the senior secured credit facilities), consisting of a senior secured incremental term loan A facility of up to $5 billion, referred to herein as the incremental term loan facility. The debt commitment letter also contemplates that, in lieu of the incremental term loan facility, the Company or one or more of its subsidiaries may obtain alternate debt financing (referred to herein as the takeout debt), the proceeds of which will reduce commitments in respect of the incremental term loan facility on a dollar-for-dollar basis. We refer to the incremental term loan facility, together with any takeout debt or any alternative financing described below in lieu of the incremental term loan facility, as the debt financing.

 

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The debt commitment letter provides that, subject to certain conditions, the incremental term loan facility will be made available in a single drawing on the date of funding, referred to herein as the funding date. Amounts borrowed under the incremental term loan facility that are repaid or prepaid may not be re-borrowed.

The proceeds of the debt financing, together with the VMware special dividend and cash on hand at Dell Technologies and its subsidiaries, will be used to fund the cash consideration payable in the Class V transaction.

The availability of the incremental term loan facility on the funding date is conditioned upon customary conditions, including, but not limited to:

 

   

the execution and delivery by the borrowers and guarantors of definitive documentation, consistent with the debt commitment letter;

 

   

receipt of the requisite stockholder approvals for the Class V transaction;

 

   

receipt by the lead arrangers of a certificate from the Company, Merger Sub and Dell certifying that certain conditions under the amended merger agreement would be satisfied if the merger were to occur on the funding date, and that such persons have no reason to believe that such conditions will not be satisfied prior to the expiration of the commitments under the debt commitment letter;

 

   

no provision of the amended merger agreement having been modified, amended, consented to or waived prior to the funding date in a manner that is materially adverse to the interests of the lenders, unless consented to by a majority of the lead arrangers;

 

   

payment of all applicable fees and expenses;

 

   

receipt by the initial lenders under the incremental term loan facility of documentation and other information about the borrowers and guarantors required under applicable “know your customer” and anti-money laundering rules and regulations (including the PATRIOT Act) at least three business days prior to the funding date;

 

   

the accuracy in all material respects of specified representations and warranties in the loan documents;

 

   

the funding date having occurred on or before five business days after the outside date of January 31, 2019 under the merger agreement; and

 

   

the conditions to the incurrence of an incremental term loan facility under the credit agreement having been satisfied as of the funding date.

Pursuant to the merger agreement amendment, Dell Technologies may, in its sole discretion, decide to obtain alternative financing if the board of directors determines that such alternative financing is in the best interests of the Company. However, if the terms and conditions of such alternative financing relative to the terms and conditions set forth in the debt commitment letter would reasonably be expected to (i) result in a corporate credit rating downgrade of the Company, (ii) materially delay or prevent or make less likely the funding of such alternative financing (or the satisfaction of the conditions to such alternative financing), (iii) adversely impact the ability of the Company and/or the borrowers to enforce their respective rights to such alternative financing or the definitive agreements with respect thereto or (iv) result in net proceeds being made available to the borrowers or any of their affiliates in an amount which is not sufficient to pay the aggregate amount of cash elections in excess of $9 billion (subject to the $14 billion cap), then, in each case, the prior written consent of the Special Committee would be required to obtain such alternative financing.

The documentation governing the incremental term loan facility and other debt financing contemplated by the debt commitment letter has not been finalized and, accordingly, the actual terms of such financing may differ in material respects from those described in this supplement.

Incremental Term Loan Facility

Obligors

The co-borrowers under the senior secured credit facilities are Dell International and EMC. Consistent with the existing obligations under the senior secured credit facilities, the incremental term loan facility will be

 

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unconditionally guaranteed by Denali Intermediate and Dell, and each existing and subsequently acquired or organized direct or indirect material wholly owned domestic restricted subsidiary of Denali Intermediate (other than the borrowers), with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract or would result in material adverse tax consequences.

Consistent with the existing obligations under the senior secured credit facilities, the incremental term loan facility will be secured, subject to permitted liens and other exceptions, by (i) a first priority security interest in substantially all the tangible and intangible assets of Dell International and the guarantors, including Denali Intermediate and Dell, and (ii) a first-priority pledge of 100% of the capital stock of Dell, Dell International and each direct, wholly owned material restricted subsidiary of Denali Intermediate, Dell, Dell International and each other guarantor (which pledge, in the case of any non-U.S. subsidiary of a U.S. subsidiary, will not include more than 65% of the voting stock of such non-U.S. subsidiary), in each case subject to certain exceptions. The collateral does not include, among other things, (a) a pledge of the assets or equity interests of certain subsidiaries and their respective subsidiaries or (b) any “principal property” as defined in the indentures governing the unsecured notes and debentures of Dell and the senior notes of EMC and capital stock of any subsidiary holding “principal property” as defined in the indentures governing the unsecured notes and debentures of Dell and the senior notes of EMC.

Interest Rates, Fees and Amortization

Interest under the incremental term loan facility will be payable, at the option of the borrower, either at a base rate plus 0.75% or an adjusted LIBOR rate, with a 0.00% floor per annum, plus 1.75%.

The borrowers will be able to elect interest periods under the incremental term loan facility of one, two, three or six months (or less than one month if agreed to by all lenders) with respect to loans bearing interest based on LIBOR. Interest will be payable, in the case of loans bearing interest based on LIBOR, at the end of each interest period (but at least every three months) and, in the case of loans bearing interest based on the base rate, quarterly in arrears.

The incremental term loan facility will initially mature on the earlier of February 8, 2019 and the date on which the amended merger agreement is terminated, referred to herein as the initial maturity date, except that the initial maturity date will be extended automatically to the date that is 364 days after the closing date of the Class V transaction, referred to herein as the first extended maturity date, so long as the merger has been consummated prior to the initial maturity date. The first extended maturity date may be extended to the date that is 364 days after the first extended maturity date, referred to herein as the second extended maturity date, so long as (i) the borrowers shall have provided written notice to each lender at least ten business days prior to the first extended maturity date, (ii) concurrently with the effectiveness of such extension, the borrowers shall have paid the extension fee as described below in respect of the aggregate principal amount of the incremental term loans so extended and (iii) the conditions to credit extensions under the credit agreement shall have been satisfied. The incremental term loan facility will have no amortization, with the balance payable on the maturity date thereof.

The borrowers will be required to pay extension fees in an amount equal to 0.50% of the aggregate principal amount of the loans under the incremental term loan facility outstanding on the first extended maturity date which have been extended to the second extended maturity date.

Prepayments

The prepayment provisions applicable to the incremental term loan facility will be the same as those applicable to the existing term loan A facility under the credit agreement. The credit agreement provides that, with respect to the term loan A facility, the borrowers shall prepay outstanding term loans, subject to certain exceptions, with:

 

   

50% (which percentage is reduced to 25% and 0% upon achievement of certain first lien leverage ratios) of Dell’s annual excess cash flow;

 

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100% (which percentage is reduced to 50% and 0% upon achievement of certain first lien leverage ratios) of the net cash proceeds of all non-ordinary course asset sales or other dispositions of property by Dell and its restricted subsidiaries (including insurance and condemnation proceeds, subject to de minimis thresholds), (1) if such net cash proceeds are not reinvested in assets to be used in the business within 450 days of the receipt of such net cash proceeds or (2) if such net cash proceeds are committed to be reinvested within 450 days of the receipt thereof and such reinvestment is completed within 180 days thereafter; and

 

   

100% of the net cash proceeds of any issuance or incurrence of debt by Dell or any of its restricted subsidiaries, other than debt permitted under the term loan facilities pursuant to the senior secured credit facilities.

The borrowers may voluntarily repay outstanding loans under the senior secured credit facilities at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans.

Certain Covenants and Events of Default

The covenants and events of default applicable to the incremental term loan facility will be the same as those applicable to the existing term loan A facility under the credit agreement. The credit agreement contains customary affirmative covenants, including, among other things, delivery of annual audited and quarterly unaudited financial statements, notices of defaults, material litigation and material ERISA events, submission to certain inspections, maintenance of property and customary insurance, payment of taxes and compliance with laws and regulations. The credit agreement also contains customary negative covenants that will apply to the incremental term loan facility and, subject to certain exceptions, qualifications and “baskets,” generally limit the borrowers’ and its restricted subsidiaries’ ability to incur debt, create liens, make fundamental changes, enter into asset sales and sale-and-lease back transactions, make certain investments and acquisitions, pay dividends or distribute or redeem certain equity, prepay or redeem certain debt and enter into certain transactions with affiliates. The incremental term loan facility will also be subject to a first lien net leverage ratio maintenance covenant that governs the existing term loan A facility under the credit agreement and requires such ratio to be no greater than 5.5:1.0. Such ratio is tested at the end of each fiscal quarter.

The credit agreement also contains certain customary events of default (including upon a change of control), which will apply to the incremental term loan facility.

Litigation Relating to the Class V Transaction

On October 31, 2018, High River Limited Partnership, Icahn Partners Master Fund LP, and Icahn Partners LP filed an action against us in Delaware Chancery Court, pursuant to Section 220 of the DGCL, seeking (i) to inspect certain of our books and records purportedly related to the Class V transaction or the potential initial public offering of our Class C Common Stock, and (ii) the public dissemination of unspecified materials already produced for inspection (High River LP v. Dell Techs. Inc., No. 2018-0790-AGB (Del. Ch. filed Oct. 31, 2018)). On November 5, 2018, the Chancery Court scheduled a trial on the matter for November 19, 2018. Prior to the scheduled trial, on November 15, 2018, the plaintiffs voluntarily dismissed this action against the Company.

On November 8, 2018, Hallandale Beach Police and Fire Retirement Plan filed a putative stockholder class action lawsuit against our directors and certain of the MD stockholders, the MSD Partners stockholders and the SLP stockholders in Delaware Chancery Court, alleging, among other things, that the directors of the Company breached their fiduciary duties to Class V stockholders in connection with the Class V transaction, because, among other things, the Class V transaction is allegedly financially unfair and coercive to Class V stockholders and there were various conflicts of interest (Hallandale Beach Police and Fire Retirement Plan v. Michael Dell, et al., No. 2018-0816-JTL (Del. Ch. filed November 8, 2018)). The lawsuit seeks, among other things, a judicial declaration that that defendants breached their fiduciary duties and an award of damages, fees and costs.

Additional lawsuits arising out of or relating to the merger agreement or the Class V transaction may be filed in the future.

 

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UPDATE TO THE MERGER AGREEMENT

The following information supplements and, where applicable, replaces the information under the heading “The Merger Agreement” beginning on page 232 of the proxy statement/prospectus. We urge you to read this supplement and the proxy statement/prospectus carefully, including the attached annexes and the other documents incorporated by reference into the proxy statement/prospectus and this supplement. See “Where You Can Find More Information” for information on how to obtain copies of the incorporated documents or view them via the internet.

The following summarizes the material provisions of the merger agreement amendment. This summary does not purport to be complete and may not contain all of the information about the merger agreement amendment that is important to you. The rights and obligations of the parties to the amended merger agreement are governed by the express terms and conditions of the amended merger agreement and not by this summary or any other information contained in this supplement. Dell Technologies stockholders are urged to read the merger agreement amendment carefully and in its entirety, as well as this supplement, before making any decisions regarding the merger. This summary is qualified in its entirety by reference to the merger agreement amendment, a copy of which is attached as Annex S-A to this supplement and is incorporated by reference herein

Effect of the Merger

Organizational Documents

At the effective time of the merger, the existing Company certificate will be amended and restated as a result of the merger so as to read in its entirety as set forth in the form of the amended and restated Company certificate attached as Exhibit A to the merger agreement amendment that is attached as Annex S-A to this supplement, and, as so amended and restated will be the certificate of incorporation of Dell Technologies as the surviving corporation of the merger until thereafter changed or amended as provided therein or by applicable law. Additional information about the amended and restated Company certificate can be found in “Update to Proposal 2—Adoption of Amended and Restated Company Certificate.”

At the effective time of the merger, the existing Company bylaws will be amended and restated so as to read in their entirety as set forth in the amended and restated Company bylaws attached as Exhibit B to the merger agreement amendment that is attached as Annex S-A to this supplement, and, as so amended and restated will be the bylaws of Dell Technologies as the surviving corporation of the merger until thereafter changed or amended as provided therein or by applicable law.

Transaction Consideration and Elections

Consideration Payable to Holders of Class V Common Stock

At the effective time of the merger, by virtue of the merger and without any action on the part of Dell Technologies, Merger Sub or any holder of any shares of common stock of Dell Technologies or capital stock of Merger Sub, each share of Class V Common Stock issued and outstanding immediately prior to the effective time of the merger will be cancelled and converted into the right to receive the following:

(1) in the case of a share of Class V Common Stock with respect to which an election to receive share consideration has been properly made and not revoked or lost, a number of validly issued, fully paid and non-assessable shares of Class C Common Stock equal to the applicable exchange ratio described in “—Exchange Ratio” below, and

(2) in the case of a share of Class V Common Stock with respect to which an election to receive cash consideration has been properly made and not revoked or lost, $120.00 in cash, without interest, subject to proration as described in “—Proration of Aggregate Cash Consideration” below.

 

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Exchange Ratio

In the event that all holders of Class V Common Stock make, or are deemed to have made, share elections to receive solely shares of Class C Common Stock by the election deadline, each share of Class V Common Stock will be exchanged at the minimum exchange ratio of 1.5043 shares of Class C Common Stock. In the event that not all holders of Class V Common Stock make, or are deemed to have made, share elections by the election deadline, then the minimum exchange ratio will be increased by the exchange ratio adjustment, which amount will be a number of shares equal to (a) 0.01998 multiplied by (b) the lesser of (x) $15.45 and (y) the amount (which may be zero but, for the avoidance of doubt, not less than zero) by which the DVMT Trading Price is less than $120.00 multiplied by (c) the lesser of (x) 1.0 and (y) a fraction (i) the numerator of which is equal to the aggregate amount of cash election as of the election deadline (without giving effect to any transfers of shares of Class V Common Stock which occur after the election deadline) and (ii) the denominator of which is equal to $14 billion, provided that the exchange ratio adjustment will not exceed 0.3087. In the event that the full amount of the exchange ratio adjustment is applicable, each share of Class V Common Stock will be exchanged at the maximum exchange ratio of 1.8130.

With respect to any share consideration received by holders, holders will receive not less than 1.5043 shares of Class C Common Stock for each share of Class V Common Stock that is exchanged pursuant to the Class V transaction.

The DVMT Trading Price is the 17-day aggregate volume-weighted average price per share of Class V Common Stock on the NYSE (as reported on Bloomberg) for a period of 17 consecutive trading days ending on the date of the election deadline, which is 5:30 p.m., New York City time, on the eighth trading day following the date on which the Company issues a public announcement that the requisite stockholder approvals for the Class V transaction have been obtained.

The following tables illustrate (i) the applicable exchange ratio based on hypothetical DVMT Trading Prices, assuming holders of Class V Common Stock elect in the aggregate to receive the cash consideration shown in the first column and (ii) the corresponding economic ownership in Dell Technologies that will be held by current holders of Class V Common Stock (on a fully-diluted basis).

Exchange ratio:

 

Aggregate Cash Election Amount (in
billions)

   Illustrative DVMT Trading Price  
   $120.00      $118.00      $116.00      $114.00      $112.00      $110.00      $108.00      $106.00      $104.55  

$0.0

     1.5043        1.5043        1.5043        1.5043        1.5043        1.5043        1.5043        1.5043        1.5043  

$2.0

     1.5043        1.5100        1.5157        1.5214        1.5271        1.5328        1.5386        1.5443        1.5484  

$4.0

     1.5043        1.5157        1.5271        1.5386        1.5500        1.5614        1.5728        1.5842        1.5925  

$6.0

     1.5043        1.5214        1.5386        1.5557        1.5728        1.5899        1.6071        1.6242        1.6366  

$8.0

     1.5043        1.5271        1.5500        1.5728        1.5956        1.6185        1.6413        1.6641        1.6807  

$10.0

     1.5043        1.5328        1.5614        1.5899        1.6185        1.6470        1.6756        1.7041        1.7248  

$12.0

     1.5043        1.5386        1.5728        1.6071        1.6413        1.6756        1.7098        1.7441        1.7689  

$14.0

     1.5043        1.5443        1.5842        1.6242        1.6641        1.7041        1.7441        1.7840        1.8130  

Economic ownership percentage:

 

Aggregate Cash Election Amount

(in billions)

   Illustrative DVMT Trading Price  
   $120.00     $118.00     $116.00     $114.00     $112.00     $110.00     $108.00     $106.00     $104.55  

$0.0

     32.8     32.8     32.8     32.8     32.8     32.8     32.8     32.8     32.8

$2.0

     30.9     31.0     31.1     31.1     31.2     31.3     31.4     31.5     31.5

$4.0

     28.9     29.1     29.2     29.4     29.5     29.7     29.8     30.0     30.1

$6.0

     26.8     27.0     27.2     27.4     27.7     27.9     28.1     28.3     28.5

$8.0

     24.5     24.8     25.1     25.3     25.6     25.9     26.2     26.4     26.6

$10.0

     22.1     22.4     22.8     23.1     23.4     23.7     24.0     24.3     24.6

$12.0

     19.6     19.9     20.3     20.6     21.0     21.3     21.7     22.0     22.2

$14.0

     16.8     17.2     17.6     17.9     18.3     18.7     19.0     19.4     19.6

 

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The table below illustrates the number of shares of Class C Common Stock to be issued, the total number of shares of our common stock that will be outstanding and the economic ownership percentage in the Company (on a fully-diluted basis) that will be held by current holders of Class V Common Stock, in each case, assuming that such holders elect to receive $14 billion or more of cash:

 

    Illustrative DVMT Trading Price  
  $120.00     $118.00     $116.00     $114.00     $112.00     $110.00     $108.00     $106.00     $104.55  

Class C Shares Issued (in millions)

    124.4       127.7       131.0       134.3       137.6       140.9       144.2       147.5       149.9  

Total Common Stock (in millions)

    739.0       742.3       745.6       748.9       752.2       755.5       758.8       762.1       764.5  

Economic Ownership%

    16.8%       17.2%       17.6%       17.9%       18.3%       18.7%       19.0%       19.4%       19.6%  

Assuming all holders of Class V Common Stock elect to receive shares of Class C Common Stock in the Class V transaction, upon the completion of the Class V transaction, approximately 299.9 million shares of Class C Common Stock will be issued, the Company will have approximately 914.5 million shares of common stock in total outstanding and the economic ownership percentage in the Company (on a fully-diluted basis) that will be held by current holders of Class V Common Stock will be approximately 32.8%.

With respect to any share consideration received by holders, holders will receive not less than 1.5043 shares of Class C Common Stock for each share of Class V Common Stock that is exchanged pursuant to the Class V transaction.

Holders of Class V Common Stock will not know the applicable exchange ratio at the time they make their election because the applicable exchange ratio is dependent upon the aggregate amount of cash elections made by holders of Class V Common Stock and the DVMT Trading Price, neither of which will be known by the election deadline. However, beginning on the eighth trading day prior to the date of the special meeting of stockholders, the Company expects to make publicly available on its website each day unofficial estimates of the aggregate amount of cash elections and share elections as of 5:30 p.m., New York City time, on the trading day prior to such publication that are based on preliminary reports from the exchange agent, in order to provide Class V stockholders with the most recent information available. Holders should exercise caution in relying on these numbers, since they may not reflect the elections of large Class V stockholders whose elections may not be made until late in the process, and whose elections may significantly impact the aggregate amount of cash elections and share elections and thereby, the final exchange ratio.

Any share of Class V Common Stock with respect to which neither an election to receive share consideration nor an election to receive cash consideration has been properly made and any share of Class V Common Stock with respect to which such an election has been revoked or lost and not subsequently made will be converted into the right to receive share consideration.

From and after the effective time of the merger, all such shares of Class V Common Stock will no longer be outstanding and automatically will be cancelled and will cease to exist, and each applicable holder of a certificate or book-entry shares, which immediately prior to the effective time of the merger represented any such shares of Class V Common Stock, will cease to have any rights with respect thereto, except the right to receive the transaction consideration therefor upon the surrender of such certificate or book-entry shares in accordance with the terms and conditions of the amended merger agreement.

Proration of Aggregate Cash Consideration

The aggregate amount of cash consideration to be received by the holders of shares of Class V Common Stock in the merger may not exceed $14 billion. If the total amount of cash consideration elected by holders of Class V Common Stock would exceed $14 billion, then, instead of being converted into the right to receive the cash consideration, a portion of the shares with respect to which a holder elects to receive the cash consideration will be converted into the right to receive the cash consideration, with such portion equal to a fraction, the

 

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numerator of which is $14 billion and the denominator of which is the aggregate amount of cash consideration elected by all holders of Class V Common Stock, and the remaining portion of such shares held by each such holder will be converted into the right to receive the share consideration. The number of shares of Class C Common Stock to be received with respect to such portion of shares that are converted into the right to receive the share consideration will depend on the exchange ratio, which will be determined as described elsewhere in this supplement. See “Updates to Election to Receive Class C Common Stock or Cash Consideration—Proration of Aggregate Cash Consideration.”

Treatment of Equity Awards

The increase in the exchange ratio under the merger agreement described in this supplement under “—Transaction Consideration and Elections” also applies to the exchange ratio used to convert the Class V Common Stock-based equity awards. Therefore, all of the outstanding stock options, restricted stock units and deferred stock units covering shares of Class V Common Stock held by our independent directors at the time the Class V transaction is completed will be converted into similar awards covering shares of Class C Common Stock at the effective time of the merger at the same applicable exchange ratio, and not at the exchange ratio of 1.3665 previously fixed under the merger agreement.

Representations and Warranties

The merger agreement amendment contains additional representations and warranties of the Company relating to:

 

   

the lawful ability of each of Dell International and EMC and each Dell Technologies subsidiary that is a direct or indirect equityholder of each of Dell International and EMC to declare and pay to its parent entity a special dividend equal to the gross proceeds of the debt financing; and

 

   

the receipt, delivery and validity of the debt commitment letter.

Certain Covenants and Agreements

Debt Financing

The Company has agreed to use its reasonable best efforts to obtain $5 billion of debt financing on the terms and conditions set forth in the debt commitment letter and any fee letters related thereto, collectively referred to herein as the debt financing commitment, as promptly as reasonably practicable. The Company has further agreed not to permit, without the Special Committee’s prior written consent, any amendment or modification to be made to, or any waiver of any provision under, the debt financing commitment, if such amendment, modification or waiver:

 

   

reduces (or could have the effect of reducing) the aggregate amount of the debt financing (including by increasing the amount of fees to be paid or original issue discount in respect of the debt financing); or

 

   

imposes new or additional conditions or otherwise expands, amends or modifies any of the conditions to the debt financing, or otherwise expands, amends or modifies any other provision of the debt financing commitment, in a manner that would reasonably be expected to:

 

   

materially delay or prevent or make less likely the funding of the debt financing (or satisfaction of the conditions to the debt financing) on the date the closing occurs; or

 

   

adversely impact the ability of the Company and/or the borrowers to enforce their respective rights against other parties to the debt financing commitment or the definitive agreements with respect thereto, in each case, relating to the funding thereunder.

The Company, without the consent of the Special Committee, may amend the debt financing in any manner the board of directors determines is in the best interests of the Company (including to add lenders, arrangers,

 

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bookrunners, agents, managers or similar entities that have not executed the debt financing commitment and amend the economic and other arrangements with respect to the existing and additional lenders, arrangers, bookrunners, agents, managers or similar entities) so long as such amendment would not reasonably be expected to:

 

   

materially delay or prevent or make less likely the funding of the debt financing (or satisfaction of the conditions to the debt financing) on or prior to the closing date;

 

   

adversely impact the ability of the Company and/or the borrowers to enforce their respective rights against other parties to the debt financing commitment or the definitive agreements with respect thereto, in each case, relating to the funding thereunder; and

 

   

result in the net proceeds of the debt financing being made available to the borrowers or any of their affiliates, as applicable, in an amount not sufficient to satisfy the debt financing condition.

The Company has further agreed to use its reasonable best efforts to:

 

   

maintain in effect the debt financing commitment until the Class V transaction is consummated or, if earlier, the Company has received net proceeds of the debt financing in an amount sufficient to satisfy the debt financing condition;

 

   

negotiate and enter into definitive agreements with respect to the debt financing on the terms and conditions contained in the debt financing commitment (on terms and conditions that, taken as a whole, are no less favorable to the Company than the terms and conditions contained in the debt financing commitment);

 

   

satisfy (or obtain a waiver of) on a timely basis or cause the satisfaction (or waiver) on a timely basis of all conditions to funding in the debt financing commitment and such definitive agreements with respect thereto applicable to the Company and/or the borrowers that are to be satisfied by the Company and/or the borrowers and consummate the debt financing; and

 

   

comply with all of its obligations under the debt financing commitment.

Prior to the closing of the merger, the Company has agreed to give the Special Committee prompt notice:

 

   

of any breach or default (or any event that, with or without notice, lapse of time or both, would reasonably be expected to give rise to any default or breach) by any party to the debt financing commitment or definitive agreements related to the debt financing of which the Company becomes aware, if such breach or default would reasonably be expected to affect the timely availability of, or the amount of, the debt financing;

 

   

of the receipt of any written notice or other written communication from any financing source with respect to any (1) actual or alleged breach, default, termination or repudiation by any party to the debt commitment letter or definitive agreements related to the debt financing or (2) material dispute or disagreement between or among any parties to the debt financing commitment or definitive agreements related to the debt financing, in each case, that would reasonably be expected to affect the timely availability of, or the amount of, the debt financing; and

 

   

if at any time for any reason the Company believes in good faith that it will not be able to obtain all or any portion of the debt financing on the terms and conditions, in the manner or from the sources contemplated by the debt financing commitment or definitive agreements related to the debt financing.

If the Company so elects in its sole discretion (but subject to the requirements for alternative financing set forth below) or otherwise upon the occurrence of any circumstance referred to in the preceding paragraph, or if any portion of the debt financing otherwise becomes unavailable on the terms and conditions contemplated in the debt financing commitment or the Company becomes aware of any event or circumstance that would reasonably be expected to make any portion of the debt financing becoming unavailable on the terms and conditions

 

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contemplated in the debt financing commitment, the Company will use its reasonable best efforts to arrange and obtain in replacement thereof alternative financing as promptly as reasonably practicable following the occurrence of such event. The Company will deliver to the Special Committee true, correct and complete copies of the new financing commitment letter and related fee letter pursuant to which any such alternative source shall have committed to provide any portion of the alternative financing.

Dell Technologies may, in its sole discretion, decide to obtain alternative financing if the board of directors determines that such alternative financing is in the best interests of the Company. However, the prior written consent of the Special Committee is required if the terms and conditions of such alternative financing relative to the terms and conditions set forth in the debt commitment letter would reasonably be expected to (i) result in a corporate credit rating downgrade of the Company, (ii) materially delay for prevent or make less likely the funding of such alternative financing (or satisfaction of the conditions to such alternative financing) on or prior to the closing date of the merger, (iii) adversely impact the ability of the Company and/or the borrowers to enforce their respective rights against the other parties to such alternative financing or the definitive agreements with respect thereto, in each case, relating to the funding thereof, or (iv) result in net proceeds being made available to the borrowers or any of their affiliates in an amount which is not sufficient to satisfy the debt financing condition.

Corporate Governance

The merger agreement amendment includes the agreement of the Company to appoint a fourth independent director who meets the independence requirements of the NYSE to the Company’s board of directors by no later than June 30, 2019 after consultation with holders of Class C Common Stock.

Additionally, the Company has agreed to establish a nominating and corporate governance committee of the board of directors by no later than June 30, 2019. The nominating and corporate governance committee will include one director who meets the independence requirements of the NYSE and will initially be comprised of Michael Dell (who will be the chairman of the nominating and corporate governance committee), Egon Durban and one director who meets the independence requirements of the NYSE. The nominating and corporate governance committee will, in addition to any other responsibilities delegated to it by the board of directors, select, or recommend that the board of directors select, the Group IV Director nominee for election or re-election to the board of directors at each annual meeting of the stockholders of the Company, beginning with the second annual meeting of the stockholders of the Company occurring after the closing of the merger. For additional information, see “Update to Management of Dell Technologies After the Class V Transaction—Committees of the Board of Directors—Nominating and Corporate Governance Committee.”

Conditions to the Merger

The merger agreement amendment also adds as conditions to the respective obligations of each party to effect the merger the satisfaction or (to the extent permitted by law) waiver by Dell Technologies and Merger Sub on or prior to the date closing occurs of the following conditions:

 

   

as of the VMware special dividend payment date, the board of directors or other applicable governance body of all of our subsidiaries through which payments of the proceeds of the VMware special dividend and the debt financing will pass in order to be received by Dell Technologies in accordance with the Dell Technologies’ good faith plan for directly or indirectly transferring such proceeds to Dell Technologies must, in each case, have determined that such subsidiary meets all solvency and legal requirements (including capital adequacy, to the extent applicable) to dividend, distribute, loan or otherwise transfer the proceeds that it receives in accordance with such plan, and the VMware special dividend must have been paid to Dell Technologies’ subsidiaries that are the holders of record of VMware common stock as of the VMware special dividend record date;

 

   

in the event the aggregate amount of all cash election is (1) equal to or greater than $14 billion, the borrowers or their affiliates must have received or will receive, concurrently with the closing of the

 

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merger, $5 billion of gross proceeds from the debt financing or any alternative financing or (2) greater than $9 billion but less than $14 billion, Dell Technologies and EMC or their affiliates will have received or will receive, concurrently with the closing of the merger, an amount of gross proceeds from the debt financing or any alternative financing equal to the aggregate amount of all cash elections less $9 billion, the foregoing referred to as the debt financing condition;

 

   

each Company subsidiary through which proceeds of such debt financing will pass in order to be received by the Company must have determined that such subsidiary meets all solvency and legal requirements to dividend, distribute, loan or otherwise transfer the proceeds of such debt financing or alternative financing that it will receive in accordance with the plan of distribution established by the Company;

 

   

any transfers of Class V Common Stock following the election deadline but prior to the closing of the merger must not have resulted in the aggregate number of shares of Class C Common Stock to be issued as share consideration exceeding the aggregate number of shares of Class C Common Stock registered pursuant to the Company’s Registration Statement on Form S-4; and

 

   

the shares of Class C Common Stock must have been approved for listing on the NYSE, subject to official notice of issuance and compliance by the Company with all applicable listing standards of the NYSE on the date on which such shares begin trading on the NYSE.

If the aggregate amount of all cash elections is less than or equal to $9 billion, then the debt financing condition will not apply and there will be no condition related to the debt financing or any alternative financing.

VMware Agreement

In connection with the execution of the merger agreement amendment, the Company and VMware entered into a waiver, referred to herein as the VMware waiver, pursuant to which (1) VMware waived only those provisions of the VMware Agreement that would otherwise restrict the Company’s ability to execute, deliver and perform the merger agreement amendment (but such waiver does not apply to any other future amendments of the merger agreement), and (2) the Company waived only those provisions of the VMware Agreement that would otherwise restrict VMware’s board of directors from adopting the resolutions reaffirming, in light of the merger agreement amendment, the declaration of the VMware special dividend, and other resolutions related thereto, including, without limitation, with respect to the record date and payment date for the VMware special dividend (but this waiver does not apply to any other future resolutions that would terminate, modify or rescind the resolutions relating to the declaration of the VMware special dividend).

Amended Sponsor Stockholders Agreements

The MD stockholders, the SLP stockholders and the Company will not enter into the Amended Sponsor Stockholders Agreement as described in the proxy statement/prospectus. Instead, the MD stockholders, the SLP stockholders and the Company have agreed that, effective upon the completion of the Class V transaction, the Sponsor Stockholders Agreement will be terminated, and the MD stockholders will enter into the MD Stockholders Agreement with the Company and the SLP stockholders will enter into the SLP Stockholders Agreement with the Company. Except as described below, the material terms of the Amended Sponsor Stockholders Agreement as described in the proxy statement/prospectus pertaining to the MD Stockholders shall be contained in the MD Stockholders Agreement and the material terms pertaining to the SLP Stockholders shall be contained in the SLP Stockholders Agreement. The SLP stockholders will not be parties to the MD Stockholders Agreement and the MD stockholders will be parties to the SLP Stockholders Agreement solely with respect to the specified provisions relating to tag-along rights and certain representations therein.

The SLP Stockholders Agreement will permit the SLP stockholders to terminate certain governance-related provisions of such agreement, including the director nomination and support obligations, in their sole discretion at any time they beneficially own less than 5% of the issued and outstanding shares of Class C Common Stock

 

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(after giving effect to the conversion of all shares of common stock owned by the SLP stockholders into Class C common stock). The MD Stockholders Agreement will permit the MD stockholders to terminate such agreement if the SLP Stockholders Agreement is terminated. The MD Stockholders Agreement also will require that any termination, amendments or waiver of certain of the Company’s right