Dell Technologies has confirmed it's looking into spinning off its 81 percent stake in VMware to Dell shareholders. The company said the process was still at an early stage and any spin-off would not happen before September 2021.
Dell said the tax-free spin-off could create more value for shareholders in the long term, and it would ask VMware to pay a special dividend prior to the spin-off. The commercial cooperation with VMware would be unchanged.
A spin-off is not the only option. Dell said it continues to evaluate a range of strategic options for its interest in VMware, including maintaining its current ownership in the company.
Dell took control of VMware when it acquired EMC. The company has continued to operate independently as a subsidiary of Dell with its own stock market listing.
VMware said it has formed a special board committee of independent directors to discuss the plans with Dell. The spin-off could be positive for the company, it said, resulting in a more diverse investor base and simpler capital structure. Any special dividend would be financed by debt, but the company does not expect its credit rating to be affected.
