Dell Technologies announced the planned spin-off of its 81% equity ownership interest in VMware. The transaction will result in two standalone companies positioned for growth in the data era, the company said in its release.
Dell Technologies and VMware will enter into a commercial agreement that will preserve the companies’ unique and differentiated approaches to the co-development of critical solutions and alignment on sales and marketing activities. VMware will continue to use Dell Financial Services to help its customers finance their digital transformations.
“By spinning off VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders,” said Michael Dell, chairman and chief executive officer, Dell Technologies. “Both companies will remain important partners, providing Dell Technologies with a differentiated advantage in how we bring solutions to customers. At the same time, Dell Technologies will continue to modernize its core infrastructure and PC businesses and embrace new opportunities through an open ecosystem to grow in hybrid and private cloud, edge and telecom.”
Upon completion of the spin-off, Michael Dell will remain chairman and chief executive officer of Dell Technologies, as well as chairman of the VMware board. Zane Rowe will remain interim CEO of VMware, and the VMware board of directors will remain unchanged, the company added.
At the transaction closing, VMware will distribute a special cash dividend of $11.5 – $12 billion to all VMware shareholders, including Dell Technologies. Based on Dell Technologies’ current 80.6% ownership in VMware, Dell Technologies would receive approximately $9.3 – $9.7 billion and intends to use the net proceeds to pay down debt, positioning the company well for Investment Grade ratings.
At the transaction closing, Dell Technologies shareholders would receive approximately 0.44 shares of VMware for each share of Dell Technologies that they hold, based on shares outstanding today.
HrNxt.com Newsdesk has researchers and writers with an excellent domain knowledge about the talent ecosystem, and the business environment. The team keeps a tab on the latest happenings in the ecosystem to bring most relevant news and insights for our readers. You can connect with our newsdesk at newsdesk@hrnxt.com.