Dell has revealed its plan to spin off its 81% stake in VMware in an attempt to reduce its debt.
According to TechCrunch, the way that the deal works is that “Dell plans to offer VMware shareholders a special dividend of between $11.5 and $12 billion. As Dell owns approximately 81% of those shares that would work out to somewhere between $9.3 and $9.7 billion coming into Dell’s coffers when the deal closes later this year”.
Dell CEO, Michael Dell says that by spinning off VMware, “we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders. Both companies will remain important partners, with a differentiated advantage in how we bring solutions to customers”.
This is a move long overdue, revealed Dan Ives, analyst at Wedbush Securities. “Great news to Dell shareholders as it unlocks the value that’s stuck in the VMWare ownership.”
TechCentral reports that the spinoff could also “allow VMware to strike more partnerships with major cloud computing providers including Amazon.com and Microsoft, which are also Dell’s primary technology competitors”.
“This will clearly give us a lot of flexibility strategically to do more partnerships,” says VMware interim CEO, Zane Rowe.
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