After many months of deliberation Dell Technologies has 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.
Dell currently owns 81.6 % stake in VMware since its 2016 purchase of EMC, which owns VMware, for $ 67 billion. Under the terms of the planned spin-off, VMware will distribute a cash dividend of $11.5 – $12 billion to all VMware shareholders, which includes about $ 9.7 billion to Dell Technologies.
A spin-off from Dell Technologies provides VMware increased freedom to execute its strategy, a simplified capital structure and governance model and additional strategic, operational and financial flexibility, while maintaining the strength of the two companies’ strategic partnership.
“We will have an enhanced ability to extend our ecosystem across all cloud vendors and on-premises infrastructure vendors and a capital structure that will support growth opportunities,” said Zane Rowe, chief financial officer and interim chief executive officer, VMware. “Our strategic partnership with Dell Technologies remains a differentiator for us, and, as we execute on our multi-cloud strategy, we continue to provide customers our solutions and services on any public cloud and any infrastructure.”
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.