Dell Technologies will spin off its 81% equity ownership interest in VMware to form two standalone public companies, the firm announced in a statement.
- Dell and VMware will enter into a commercial agreement to preserve their unique and differentiated approaches to the co-development of solutions, and alignment on sales and marketing activities.
- Dell will receive approximately $9.3 to $9.7 billion which it will use to finance its own debt and position the company for investment grade ratings.
- The transaction is expected to close in the fourth quarter of 2021, subject to conditions such as a favorable IRS ruling and opinion that the transaction will qualify as a tax-free spin-off.
- As a result, each VMware class B common stock will automatically convert into one fully paid and non-assessable share of VMware class A common stock. All outstanding VMware class B common stock is held by Dell.
- At the closing, VMware will distribute a special cash dividend of $11.5 to $12 billion to all shareholders including Dell Technologies.
- Upon completion, Michael Dell will remain chairman and chief executive officer of Dell and chairman of the VMware board. Zane Rowe will remain interim CEO of VMware, while the VMware board of directors will remain unchanged.