Mubasher: Dell Technologies Inc plans to spin off its 81% equity ownership in cloud computing and virtualisation software firm VMware.
Under the transaction, VMware will distribute a special cash dividend of $11.5-12 billion to all VMware shareholders, including Dell Technologies, according to a statement on Wednesday.
Dell Technologies will obtain about $9.3-9.7 billion from that dividend and plans to use the net proceeds to pay down debt and enhance its credit profile.
"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 CEO of 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 modernise its core infrastructure and PC businesses and embrace new opportunities through an open ecosystem to grow in hybrid and private cloud, edge, and telecom," Dell noted.
The spin-off transaction is forecast to close during the fourth quarter (Q4) of 2021.