Dell Technologies Inc.’s messy road to becoming a publicly traded company again has taken yet another twist with the news it’s planning to interview several banks to underwrite a possible initial public offering, according to reports by Reuters and The Wall Street Journal.

The interviews mean Dell is postponing a roadshow scheduled for this week that would have pitched a proposed acquisition of subsidiary VMware Inc., a move that has drawn resistance from some investors.

Earlier this year, Dell had said it was planning to pay $21.7 billion in cash and stock to buy back shares of its VMware tracking stock, which would have meant a return to the stock market without an IPO.

If it goes down the IPO route instead, Dell would therefore not need to purchase the VMware tracking stock, the Journal said. However, it noted that the bank interviews could well be a “tactic to put pressure on investors” to support the VMware tracking stock acquisition, which is believed to be the preferred option of Dell Chief Executive Michael Dell (pictured).

Dell has refused to comment on the reports, which come after Dell said earlier this month it would stage a number of roadshow meetings with key investors in order to convince them of the merits of the VMware deal.

The proposed buyout would see investors receive 1.3665 shares of Dell Technologies Class C common stock, or $109 , for each share of DVMT tracking stock they hold. VMware’s board of directors, as part of the deal, have voted on an $11 billion cash dividend to VMware shareholders that’s contingent on the buyout being accepted.

If the VMware deal does go through, the virtualization software subsidiary would retain its independent status, with Dell owning 81 percent of its common stock.

Longtime industry analyst Dave Vellante of Wikibon said the VMware stock buyback was an appealing option for Dell as it simplifies the corporate structure and gives them a simpler path to becoming a public company again. But the problem Dell faces is that hedge funds such as those operated by Elliot Management Corp. and Carl Icahn are blockers. These two and others were major antagonists when Dell originally went private and EMC was a public company. Both own DVMT stock and they’re trying to squeeze Dell for a better deal, the analyst said.

“This is a negotiating tactic to get a bigger slice of the pie, despite the huge appreciation so far for DVMT,” Vellante said. “Dell is offering a nice premium over the current DVMT but Icahn, Elliott et. al. want more. Hedge funds are greedy and when they see how much Dell is making on the deal, they get antsy and want more.”

Analyst Rob Enderle of the Enderle Group had a slightly different take, saying that Michael Dell was trying a creative way to solve what is a big problem for company: its inability to give stock options, which have basically replaced pensions for most executives, to all but its most powerful execs.

“This means they have to make up for the options with higher salaries, which hurt the bottom line, and because salaries are currently taxable, the goal of a strong tax deferred benefit isn’t met,” Enderle explained.

The problem for Dell is getting investors to agree on its proposed solution, which Enderle says is a creative plan that would ensure it has many of the freedoms of a private company, together with a marketable security that can be used for compensation.

“Both Facebook and Google tried their own blend [of this] which resulted in the founders having unusual control and being protected from being fired, but they didn’t avoid the reporting requirements and these examples serve as the closest in market to what Dell wants to do,” Enderle added. “Michael Dell may end up having to follow their lead, but he is clearly working to see if his folks can come up with an even better balance.”

However, Vellante said the traditional IPO is also still a good option for Dell if it can’t get the support it needs to buy back the tracing stock. “The market is hot and valuations are up, which gives Dell options,” he added.

Whatever route the company eventually decides upon, customers can be assured there will be little disruption on their end, Dell executives and industry analysts both say.

In an interview on SiliconANGLE’s mobile livestreaming studio theCUBE at VMworld 2018 last month, Michael Dell said the company had been completely open about the process, disclosing information as though it was already on the stock market.

“We make all of the public filings, it’s out there and available,” Dell said. “What I see is no change in how we’re operating and our strategy, our relationship with our customers and partners, and VMware’s independence.”

Holger Mueller, principal analyst and vice president of Constellation Research Inc., said Dell was looking to go public again because of changes in how its corporate debt can be accounted, which makes a publicly traded status more financially attractive than continuing as a private entity.

“The main concern for CxOs remains on how Dell will transform its product offerings, no matter if it remains private, goes public or whatever form of finance and operation Michael Dell and investors will choose,” Mueller said. “The challenges are really not on the financial side, but on the product and innovation side.”

Photo: SiliconANGLE