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VMware Board Declares $11 Bln Special Dividend - Quick Facts

The Board of VMware Inc. (VMW) announced an $11 billion one-time special dividend pro-rata to all VMware stockholders payable in connection with the closing of the transaction announced by Dell Technologies.

Dell announced that it has concluded its evaluation of strategic alternatives and reached an agreement with its independent directors to offer a new class of publicly listed common stock following the completion of a proposed exchange of Dell Class V tracking stock for Dell Technologies Class C common stock or cash election option. The dividend proceeds that Dell receives from VMware are expected to be used to facilitate its proposed transaction. At the conclusion of these transactions, VMware will remain an independent publicly-listed software company.

Dell announced the shares of the company's Class V common stock will be converted into the right to receive a fixed number of shares of Dell Class C Common Stock at an exchange ratio of 1.3665 shares of Class C Common Stock for every share of Class V Common Stock. Based on an implied value of $109 per share of Class V, this would represent an equity value for Dell's DHI group of $48.4 billion and total consideration to holders of Class V shares of $21.7 billion. Alternatively, holders of Class V shares can elect to receive $109 per share in cash in an aggregate amount not to exceed $9 billion. The Class C Common Stock will be listed on the NYSE. Following close, Class V stockholders will own 20.8 percent of Dell if $9 billion in cash consideration is elected or 31 percent of Dell based on all-stock consideration.

VMware reaffirmed its second-quarter fiscal 2019 guidance. The company's full fiscal year 2019 guidance also is reaffirmed for total revenue, license revenue and non-GAAP operating margin.

VMware said the distribution of the one-time special dividend will reduce interest income, and as a result its guidance will be adjusted for GAAP and non-GAAP earnings per share and annual operating cash flow. GAAP earnings per share range for fiscal 2019 is now expected to be $5.43 per share to $5.73 per share and non-GAAP earnings per share for fiscal 2019 is now expected to be $5.99 per share. Cash flow from operations is expected to be $3.55 billion, and free cash flow is expected to be $3.27 billion.

VMware's board extended authorization of the company's existing stock repurchase program, with approximately $876 million remaining, through August 31, 2019.

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