Dell spins off VMware stake
 

Debt reduction plan

Dell has said it will spin off its 81 percent 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 the COVID-19 pandemic has accelerated.Shares of Dell jumped more than 8.4 percent in extended trading, while VMWare stock rose 1.5 percent.
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