EMC CEO promises that Michael Dell will not raid VMware's cash

EMC CEO Joe Tucci and one of his board members gave VMware investors a big sales pitch as to why the proposed acquisition of EMC by Dell for a whopping $67 billion, will be good for them.

The proposed merger will be the biggest tech merger in history and it will leave Dell with a huge burden of between $40 billion and $50 billion of debt on its balance sheet.

But it's a complex deal, and has a strange provision. EMC owns about 81% of VMware and EMC plans to turn VMware into a tracking stock, with Dell and financier Silver Lake owning about 30% of VMware themselves. EMC shareholders will receive 0.111 VMware tracking share for each EMC share, under the terms. Dell also recently promised that it would dedicate $3 billion to buybacks of these tracking shares.

There's been a lot of speculation that all sorts of things could stop the deal, from weird tax obligations to shareholder angst over the fate of VMware once Dell owns it.

On Tuesday, EMC's Tucci and lead independent EMC board member Bill Green spoke at the Goldman Sachs Technology and Internet Conference 2016 in San Francisco.

They spent most of their time pitching the benefits of Dell merger and how the tracking stock will be great for VMware shareholders.

Tucci promised repeatedly "we are confident this deal will happen, in the original time frame and original conditions."

Green even went so far as to say that the two companies did such intensive due diligence when crafting the deal that they "arranged it so the deal is going to close, unless an act of God happens."

Tucci also insisted that once the deal goes through Dell won't be tempted to take VMware's cash to help pay down Dell's debt. VMware is sitting on about $8 billion in cash, and it generated nearly $1.9 billion in total cash from operations in its last fiscal quarter, about a 29% margin. The fear is that VMware will be bled dry.

Tucci promises that won't happen:

"There's the connection where Michael Dell and Silver Lake will own 27-39% of this company when it's done and they are going to operate this in the best interest of VMware. I know there are fears out there that they will raid the balance sheet. That is unfounded.

VMware's cash will be VMware's cash. VMware will use that cash to expand its business, invest in its technology, whether its organic or inorganic, … and they will have the ability to return cash to shareholders."

Tucci and Green went on for about another 20 minutes naming all the other reasons why a combined Dell/EMC will is a great idea.

VMware shares have taken a pounding since merger was announced in October, plunging from above $80 to around $43 on Tuesday. Meanwhile, VMware announced last month that it is laying off 800 employees and that its CFO has left.

On Tuesday, VMware also announced that it was adding two new men to its board of directors: GoPro president Anthony Bates (a former Microsoft and Skype exec), and former Dell and American Airlines executive Don Carty.