Dell is spinning out VMware in a deal expected to generate over $9Bn for the company

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.

The spinoff, first proposed in a filing last July, will help Dell lower its long-term debt of $41.62 Bn, 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.VMware interim CEO Zane Rowe told Reuters in an interview that VMware will use between $2.5 Bn and $3 Bn of cash from its balance sheet to pay the dividend and fund the rest with debt.

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