Billionaire computer pioneer Michael S. Dell and executives from his $19B family office launched an initial public offering Friday to raise as much as $575M for MSD Acquisition Corp. (MSDA), a new special purpose acquisition company.
“[Dell’s family office and advisers] together have over two decades of investment experience and have generated billions of dollars of investment profits,” the executive wrote in an S-1 filing with the U.S. Securities and Exchange Commission. “We believe we will benefit from [their] strong reputation in the marketplace.”
Forbes magazine lists Michael Dell as the world’s 18th richest person, with an estimated $43.3B net worth. The entrepreneur founded PC maker Dell Computer out of his college dorm room and eventually dropped out of school to run it full time.
Dell Computer was once one of Wall Street’s hottest tech stocks, but Michael Dell took it private in 2013 when the firm's fortunes waned as many consumers switched from PCs and laptops to tablets and smartphones.
But Dell paid $67B in 2016 to buy enterprise software company EMC (including its large subsidiary VMware (NYSE:VMW)) to expand its product line, returning to public markets two years later as Dell Technologies (NYSE:DELL).
Now, Michael Dell's SPAC aims to sell 50M investment units at $10 apiece, with each consisting of one Class A share and 0.2 warrants to purchase a second one at $11.50 in the future. MSD Acquisition Corp. is also granting underwriters the option to buy as many as 7.5M additional units, taking the IPO’s total potential value to $575M.
The SPAC’s sponsor has also agreed to invest an additional $12.5M to buy 8.33M warrants at $1.50 apiece, with each granting the right to buy one additional share at $11.50. That will rise to a $14M investment for 9.33M warrants if underwriters exercise all overallotment options.
Additionally, Michael Dell’s family office has agreed to a forward-purchase agreement under which it will buy as many as 5M investment units at $10 apiece once the SPAC closes on its initial merger deal. That could add as much as $50M more to the SPAC’s war chest.
Dell will serve as a strategic adviser to the SPAC, whose management team consists of three executives from his family office -- John Cardoso, Gregg Lemkau and John Phelan. The trio manage some $19B for Dell’s family.
Additionally, MSD Acquisition Corp.’s board will include Barry McCarthy, former chief financial officer at both Netflix and Spotify Technology.
While the SPAC said in its filing that it can look for deals in any sector, the company said that its team “has extensive experience across high-growth sectors, including technology and media.”
However, the executives wrote that they “do not intend to pursue an initial business combination with a company that is in a business directly related to any of the principal businesses in which Dell Technologies operates.”
Plans call for MSD Acquisition Corp.’s investment units to list on the Nasdaq under the ticker “MSDAU.” The SPAC’s shares and warrants will also later trade separately under the symbols “MSDA” and “MSDAW,” respectively.
As for DELL, the stock has risen more than 50% over the past year to close Friday at $80.77 (see chart below). Seeking Alpha contributor Thomas Lott recently did a deep dive into the stock and gave it a 12-18 month price target as high as $103, and that's even after an expected tax-free spinoff of Dell's 81% stake in VMW.
