Dell to spin off 81pc stake in cloud company VMware

Thursday, April 15, 2021

Dell Technologies Inc said on Wednesday it would spin off its 81 percent stake in cloud computing software maker VMware, in a move that will help the PC maker reduce its debt, Reuters reports.

VMware will distribute a special cash dividend of between US$11.5 billion and US$12 billion to all its shareholders, including Dell, which will receive between US$9.3 billion and US$9.7 billion, in the transaction that is expected to be tax-free.

The spinoff, first proposed in a filing last July, will help Dell lower its long-term debt of US$41.62 billion, much of which was taken on during its 2016 acquisition of data management firm EMC. Dell hopes doing so will help it achieve an investment grade rating and simplify its capital structure.

VMware is currently Dell’s best-performing unit and has benefited from companies looking to cut costs and move to the cloud, a shift that has been accelerated by the pandemic.