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Illustration: Rebecca Zisser / Axios 

Dell Technologies is working with Wall Street on some sort of major financial transaction, although specifics remain elusive.

Bottom line: The company is under pressure from the new tax plan, which means Michael Dell may need to rethink his aversion to being a public company CEO.

The latest

CNBC reported yesterday that one option is a reverse merger with VMWare, in which Dell holds an 80% stake via its $64 billion purchase of EMC. This comes after a Bloomberg story that Dell could IPO itself or buy out the remaining VMWare stake.

Why now?

Debt. Around $51 billion of it to be exact. And, as we discussed yesterday in Pro Rata, the recent tax bill is particularly tough on highly-leveraged companies (despite lower corporate rates). Had Congress included a grandfather clause, then banks like J.P. Morgan might not have recently reconstructed their Dell teams.

A big hurdle

Michael Dell originally took his company private, in part, because he absolutely hated being a public company CEO. And he maintained that posture years later:

Conventional wisdom was that when buyout sponsor Silver Lake wanted an exit, Michael himself would do the honors. But that became a much dicier proposition after the EMC deal and, again, those subsequent changes to interest deductibility.

Other options

Because it's still hard to see Michael Dell voluntarily rejoining the land of "circus clowns," we've got to entertain some alternative possibilities:

  • Michael Dell transitions into a non-CEO role, perhaps to be succeeded by VMWare's Pat Gelsinger;
  • New asset sales/public floats to pay down debt; or
  • Some sort of private transaction, perhaps with the help of a deep pocket like SoftBank (which has really become the Occam's Razor of tech financing).

Go deeper

8 hours ago - Health

FDA advisory panel recommends Pfizer boosters for those 65 and older

A healthcare worker prepares a dose of the Pfizer-BioNTech Covid-19 vaccine at the Key Biscayne Community Center on Aug. 24, 2021. Photo: Eva Marie Uzcategui/Bloomberg via Getty Images

A key Food and Drug Administration advisory panel on Friday overwhelmingly voted against recommending Pfizer vaccine booster shots for younger Americans, but unanimously recommended approving the third shots for individuals 65 and older, as well as those at high-risk of severe COVID-19.

Why it matters: While the votes are non-binding, and the FDA must still make a final decision, Friday's move pours cold water on the Biden administration's plan to begin administering boosters to most individuals who received the Pfizer vaccine later this month.

8 hours ago - World

France recalls ambassadors from U.S. and Australia over submarine deal

Secretary of State Antony Blinken (L), French Foreign Minister Jean-Yves Le Drian (C), and French ambassador to the U.S. Philippe Etienne. Photo: Nicholas Kamm/AFP via Getty Images

France has taken the extraordinary step of recalling its ambassadors to the U.S. and Australia after both countries blindsided their French allies with a new military pact and submarine contract, the French Foreign Ministry announced on Friday.

The backstory: While sealing an agreement with the U.S. and U.K. to acquire nuclear submarines, Australia ripped up an existing $90 billion submarine deal with France. That led senior French officials to accuse the U.S. of a "stab in the back."

Updated 9 hours ago - World

In reversal, Pentagon now says drone strike killed 10 Afghan civilians

Caskets for the dead are carried towards the gravesite as relatives and friends attend a mass funeral for members of a family that is said to have been killed in a U.S. drone airstrike, in Kabul on Aug. 30. Photo: Marcus Yam/Los Angeles Times via Getty Images

A U.S. drone strike launched on Aug. 29 killed 10 civilians in Afghanistan, including seven children, rather than the Islamic State extremists the Biden administration claimed it targeted, the Pentagon said Friday.

Why it matters: U.S. Central Command said at the time that officials "know" the drone strike "disrupted an imminent ISIS-K threat" to Kabul's airport, and that they were "confident we successfully hit the target."