Dell Technologies to spin off its ownership stake in VMWare
April 14, 2021. Summarized by summa-bot.
Compression ratio: 45.5%. 1 min read.
March 25, 2021, Brazil. In this photo illustration a VMware logo seen displayed on a smartphone
After months-long negotiations, Dell Technologies announced Wednesday it plans to spin off its 81% ownership stake in VMWare.
New York (CNN Business)After months-long negotiations, Dell Technologies announced Wednesday it plans to spin off its 81% ownership stake in VMWare.
"By spinning off VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders," Dell CEO Michael Dell said in a statement.
"Both companies will remain important partners, providing Dell Technologies with a differentiated advantage in how we bring solutions to customers. "
VMWare (VMW), the cloud computing and virtualization software firm that allows businesses to run various operating systems on their devices, first joined Dell Technologies in 2015 as part of its blockbuster $67 billion acquisition of corporate software, storage and security giant EMC.
In July, Dell said it would begin exploring a spin-off of VMWare.
Michael Dell will remain chairman and CEO of Dell, as well as chair of the VMWare board.
The spin-off is expected to simplify capital structures for both companies, and the transaction will provide the two firms "additional strategic and financial flexibility," Dell CFO Tom Sweet said on an investor call Wednesday.
The spin-off could be a bold move, given that VMWare's revenue has grown faster than that of the overall Dell Technologies business in recent years.
However, "the market does not appear to appreciate a hardware-software combination," CEO Michael Dell said on the call, adding that the spin-off will allow each company to focus on their own biggest potential growth areas.
"Dell and VMWare are better together, and will be important partners, continuing to innovate for customers as we move forward," Sweet said.