Dell Technologies Inc said it would spin off its 81% stake in cloud computing software maker VMware, in a move that will help the PC maker reduce its debt.
Dell Technologies Inc said it would spin off its 81% stake in cloud computing software maker VMware, in a move that will help the PC maker reduce its debt. VMware will distribute a special cash dividend of between $11.5 billion and $12 billion to all its shareholders, including Dell, which will receive between $9.3 billion and $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 $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 COVID-19 pandemic.
