- Dell Technologies Inc DELL announced the prearranged spin-off of its 81% equity ownership interest in cloud computing and virtualization technology company VMware Inc VMW. The transaction will translate into two standalone listed companies.
- Dell Technologies will receive $9.3 billion to $9.7 billion from the spin-off, which will be utilized for debt repayment.
- VMware will allocate a special cash dividend of $11.5 billion to $12 billion to the VMware shareholders, including Dell.
- The companies will agree to preserve their exclusive and distinguished approaches to developing critical solutions and alignment on sales and marketing activities. VMware will continue to utilize Dell Financial Services to finance the digital transformation of its customers.
- Michael Dell will remain the Chairperson and CEO of Dell Technologies and Chairperson of the VMware board. Zane Rowe will remain interim CEO of VMware, and the VMware board will remain intact.
- Dell shareholders will receive 0.44 VMware shares for every Dell share. VMware will change from a multiclass to a single-class share structure, while Dell's share structure will remain intact.
- Dell remained on track to capitalize on the rebound in infrastructure and PC spend, new cloud operating models driving as-a-Service growth, edge computing, and digital transformation initiatives.
- Price action: DELL shares are trading higher by 7.66% at $99.80, and VMW shares are up 0.97% at $157 in the premarket session on the last check Thursday.
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