> you heard michael dell talking about investment priorities and getting through havelvo and buying emc priority on top of just investing in the business of servicing the debt needed to keep the business running. dell got taken private at a value of about $25 billion and bought emc 12 years later for about $67 billion, a lot of debt needed to finance the company. as you look at the corporate structure of dell at the moment as a private company, not only are they sitting on about $46 billion in short and long-term debt, they have a good part of loans that are tied to liable work. more expensive to service. you have the cash considerations. you think about the new interest rate deduction changes in the latest tax laws which could potentially mean that dell cannot do that some of the interest for some of these debt and loans. looking to get more clarity on that. when the folks i talked to after we broke the story last night are reading the tea leaves as to why they would want to raise money, getting public would give them an additional access to capital through equity to help service some

emc also owns a majority stake in the publicly-traded company.hatdell acquired emc, was made into a tracking stock that trades under the ticker ddmt. that is another piece that became very important. he wants to get under oneroof as a publicly- traded company -- one roof as a publicly-traded company. also, he wants to take the tracking stock in-house. member, that is a $15 billion market cap. i am saying those shares moving right now as our headlines across the terminal. joe: from a financial engineering standpoint, what would be the advantage for dell to go public via the reverse merger? alex: it would combine all of these pieces. if you think about it, if you did a classic ipo, that stake as a corporate, they are still out there trading. it seems there is potentially some operational synergy in terms of bringing all of these different parts under one roof. when you think about the other counterparties involved, silver in more than $2 billion in equity total. right now, my sources are telling me the sponsor is not looking for an exit, but if it

the structure of the company since 2013, when it did become private, they also went out and bought emc $67 billion. they loaded up on a bunch of debt, both in the lbo and that transaction. so when you think about the company's development and what has changed, the cash development for serving some of that debt has come up in all of my conversations, and also some of the interest rate changes , up in terms of cash they will have to allocate to servicing the interest rate on some of these loans. julie: what is interesting is that, alex, operationally, the reason that michael dell was interested in bringing the company private had not changed. it would be more exogenous him to that are forcing do so, or exogenous to the core running of the business, right? alex: that's right. pulledour columnists together some good numbers, saying operating cash flow for last year was about $4.4 billion for this company. about $2 billion which to interest payments mitts -- went to interest payments. whether it is servicing the debt that dell has loaded up on or to jason's point, silver lake potentially co

the dellg emc into family a few years back.ought emc, it also created a public tracking stock that trades on the value of the stake in vmware that emc hold. this stock would be subsumed into the dell-vmware, nation if you went this route. we will keep track on how this shakes out. the board is set to make a decision in a meeting at the end of january or decide not to do anything going forward. either way, we will be there with the news. moving to the business flash headlines with jb holdings drinks.nto taking over other companies. biggestmake sure it the -- keuring the third biggest soft drink seller in the u.s. -- signsience the new of the new one dollar menu and mcdonald's is paying off. 10% increase.most positive results show mcdonald's dollar menus are resonating with more frugal diners. rishaad: that is it for this edition or this part of "bloomberg markets." david ingles is here. david: the indian budget, of course. we have been talking about the state of the union, about president trump, this is , i do want to say in the

one corporate structure, and you will remember that that is not only dell, but there is also vmware, emcs the majority stake in vmware, 80%. the rest of that is publicly traded, so this option to get public will look like a vmware takeover of dell. use the stock to take over dow and become a public company through that acquisition and become the parent company with vmware management staying in place. we don't know exactly what it will be called yet, but he likes to keep his name on thanks, at my sources don't have intel on what it will be called. it is an intriguing situation that is being laid out by my sources with the endgame of getting a public -- paying down debt and simplify and the corporate structure. there is key point to this simplication. they needed to figure out how to finance that $67 billion takeover and brought been a lot of debt and raised cash by selling a tracking stock for the state they are taking over in vmware. that stock still trades under the ticker, dvnt, and it has a $15 billion market cap, that stock can be subsumed either through a stock swap or through cash,

this is only of a few years after the lbo, and after dell bought emc.s company is looking at options. the reasons are interesting. emily: i interviewed michael dell at the end of last week. he reiterated they are happy with it the way things are. they have debt, is this a way to unload it? >> that is what folks are pointing to in terms of rationale. their debt servicing load is a big chunk. about $4 billion in debt from last year. and you have a change in interest rate reduction rules that would potentially lead dallas, not able to deduct. that cost would potentially go up. yes, being private, it will to invest in the business, is great. but if all that cash has to go toward servicing your debt load, capital structure, you potentially need revenue. i will say, an ipo is not the only thing on the table. pivotal, another dell company looking at taking that public. $5 billion to $7 billion company. bottom line, it seems like dell is considering different options for how it can bring in extra cash without having to raise more debt. vmware factors in? >> it

and through the purchase of emc owns vm ware, a lot of it.this morning in the journal -- i think it was out late last night says dell might take itself public, might buy in what it doesn't already own. it owns 81% of the company and it has issued those class v shares to track 65% of its economic ownership of vm ware. why is it a story in the market today? well, a lot of people who play these things are short vm ware common and long the dell technologies so the spread is blowing out on them today because they expected that to come together. however, if you were going to buy in the 19% you don't already own, you would pay a premium, send vm ware shares higher jim, a lot of questions about exactly what dell's motivation may be for even examining these various options. one is that under the tax bill, remember, a company with as much as $2 billion in interest payments no longer going to have all of that tax deductible because of changes under tax reform may be motivating them. there is a lot of cash at vm ware might give them more flexibility if t

cheryl: they just merged with emc. that was the biggest technology merger in the globe.ren: let's have some fun. krispy kreme, they announced new limited edition doughnut flavor and i'm disappointed and cheryl is disappointed. tracee: i am too. cheryl: i heard two different flavors. i've heard two -- fake news, what is it? tracee: the new flavor that voters have picked is lemon. that's what voters have chosen. nearly 2 million voters cast online ballots from january 16th through the 22nd, the voters pick will be featured on the menu for one week this spring, the choices were caramel that came in second place and blueberry in third place and maple in fourth place. krispy kreme -- cheryl: i wanted blueberry. they were giving me fake news, you're right. darn it. [laughter] lauren: but lemon but lemon it is. cheryl: coming up, president trump is descending, well he has descended on davos and we are just little less than three hours of america first speech. we will talk to our experts about what to expect and how the president has been received so far, do you think that there

this'll be a reverse merger, dell already owns 80% of vmware through its acquisition of the emc.an interesting way for dell to get back into the public markets without action going public in a fresh offering. we will continue to dig into this report from cnbc the dell is considering a sale to vmware. this is bloomberg. ♪ vonnie: live from new york, and vonnie quinn. mark: i am mark barton, this is the european close on "bloomberg markets." on bloomberg television. , a times can i say bloomberg? how is the strengthening euro impact of u.s. equities. he talked about the risk of the and he yield going to 3% warned of a correction might be in order. how we prepare ourselves is equity investors for that potential outcome? the first thing i observe is that most people are underweight reciprocal stocks, even though they had a tremendous run. i would continue to overweight reciprocal stocks. in the growth stocks will do well in that environment, but not as well on a relative basis. if you see, the moment you start to see that 10-year creeping towards 3%, i would certainly get ready. mark

when they did the emc acquisition, as well as the tracker stock, it was controversial. i think they view it as a mixed bag. this is not a position of strength that they would be doing this i think that's why if they're going to do it, you do it in an ipo. to do reverse merger through vmware, who would win? it would be michael dell t would be silver lake the losers would be vmware shareholders that's why right now they're in a do nun drconundrum in terms oy want to do this. >> the strategic rational, you think combining them doesn't make sense >> because part of it now, is that it's been working well because of the structure they buy emc, you have the ownership stake in vmware. they've been able to pivot from a consumer company to an enterprise it's been successful if you combined it all under one, in our opinion, it would be a lot of risk in terms of what execution-wise, and if they do t would rather do it in a traditional ipo, raise money, sell off -- >> pay down some debt. but how much cue raise in the public markets, how much cue pay down >> i think that's the questi

emc owned 80% of vmware but the rest has continued to trade as a public company so, the news today ishat dell would re-emerge as a public company by combining with vmware why would they do this two reasons come to mind initially. one, it's a way to take care of their $50 billion of debt. you get liquidity by going public in essence, you become a public company, you can sell down, pay off some of that debt. secondly stshgs gives silver lake a way to monetize their investment in dell by becoming a public company of course, they can sell those shares on the public market. those two reasons right away come to mind but this is just one option of several that the dell board is looking at they will make a decision on which one exactly to move forward with in the coming weeks we're told >> ail lex, thank you. >>> joining us to talk more about this is angelo zino who joins us by phone. when the first reports came out that dell might buy vmware, i know you had your price target up to 160. why is vmware selling off more than 13%, below 130 on these reports it could go the other way. what do you

the backdrop on all of this is the on going migration to the cloud and challenges that pudz on dell emcst as an explainer >> yes and there are more components to that than that to dell technologies as well you know, secure works they have a lot of different pieces at play but these are just discussions we'll see what they come up with >> alex, when is the meeting >> it will be in a few weeks and they're going to discuss various different options including, by the way, to jon's point, other acquisitions of company which would maintain dell as a private company and dell would simply be the buyer in those deals you know, dell is a larger company than vmware as part of this reverse merger. in essence, what that would be doing, what the other various option was not be doing is it allows silver lake a quick out silver lake could then sell the shares of vmware or this new merged company on to the public market and allow that private equity firm to mondetize. >>> steve wynn facing sexual misconduct allegations as he steps down as rnc finance chair and his company's board launches an investigati

dealing with shrinking profit margins and cost savings that didn't pan out followed by a deal to pro viet emc>> ran into michael dell. >> he's loved being private since he took the company private not dealing with shareholders, not worried about anybody like a carl icahn coming in and telling you what to do with the company that would be a pretty big about face. >> saw him at -- >> are all these things off th record >> yes >> you can say where you saw him. >> we did see him. >> this is serious stuff, interviewing the president, and serious subjects we're going to get to that i couldn't help notice, there was some serious hair on that interview. did you see that -- >> yours or his? >> both! you know what we have in common? ropecia. if i don't use the product, we're not going to endorse it. are we allowed to do it? >> you just did. >> he thinks i'm going to need it. >> i was going to leave mike off camera >> no. no anyway >> i endorse hats. >> that's right. >> this may be the weirdest lead up -- >> i told you serious things when you look, you'll see what i'm talking about. >> it's always about

the acquisition of emc stands as the largest tech deal ever.o a reverse merger with revm would theoretically be even bigger and would allow to become a publicly traded company again without going through alli the tonal offering processes. shares of vmware fell 16% that report. >>> facebook is rolling out a new privacy initiative.st userting to see notifications in their news rivacy o perform a checkup. the company is likely trying to stay one step ahead of eu regulations that will restrict how tech companies collect, store ar use y personal data. if companies breach the new rules over there, they would be subject to fines of up to 4% of their global annual that's a big number. >> it is. as facebook tries to get control of privacy issues, twitter h its own problem. fake accounts and lots of them. it's the latest black eye for a company that's come under increased scrutiny from users and investors. julia boorstin explains. >> reporter: twitter has drawn criticism for a range of issuesn enabling rus manipulation of the election, for trolling on th