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Dell spins out VMware, to generate over $9B
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Top Stories |
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IANS | 15 Apr, 2021
Dell Technologies has announced to spin out VMware -- a move that will
generate more than $9 billion for the company that acquired VMware as
part of the $58 billion EMC acquisition (announced as $67 billion) in
2015.
Dell plans to offer VMware shareholders a special dividend of between $11.5 and $12 billion.
Since it owns approximately 81 per cent of those shares, Dell will generate around $9.3-9.7 billion.
"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," Dell
CEO Michael Dell said in a statement late on Wednesday.
The
stockholders will receive a pro-rata distribution of VMware shares held
by Dell Technologies, and Michael Dell and Silver Lake Partners will own
direct interests in VMware.
VMware's recent earnings release
stated that it had $4.715 billion in "total cash, cash equivalents and
short-term investments."
"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.
According to VMware, a spin-off
from Dell Technologies provides it 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.
"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," Rowe added.
VMware and Dell Technologies will
continue to collaborate and co-engineer solutions that provide strategic
value to customers, with Dell Technologies providing go-to-market scale
for VMware's product portfolio, the companies said.
The
estimated value of the $11.5 billion to $12.0 billion special cash
dividend that VMware will provide to all stockholders ranges from $27.43
per share to $28.62 per share, based on outstanding shares as of March
16, 2021.
The transaction is expected to close during the fourth quarter of calendar year 2021.
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