Dell Technologies Gain 8% On Plan To Spin Off Its Stake In VMware

Shares of Dell Technologies Inc. (DELL) jumped over 8% in extended trading session on Wednesday after the company announced its plans to spin off its stake in VMware Inc. (VMW). The transaction will create two publicly traded companies and raise cash to pay down debt.

VMware will distribute a special cash dividend of $11.5 billion to $12 billion to shareholders at the close of the deal, which is expected by the fourth quarter, Dell said in a statement. Dell, which owns 81% stake in Vmware, expects to receive about $9.3 billion to $9.7 billion from the transaction, and intends to use the proceeds to pay down debt.

"By spinning of VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders," said Michael Dell, chairman and chief executive officer Dell Technologies. "Both companies will remain important partners."

Vmware, which was founded in 1998, was acquired by EMC in 2004. Dell received EMC's holdings in the maker of data center software after it acquired EMC for $67 billion in 2016. Dell had previously said it was considering a spin of its VMware stake.

At the transaction closing, Dell Technologies shareholders would receive about 0.44 shares of VMware for each share of Dell Technologies that they hold.

Michael Dell would remain chairman and CEO of Dell Technologies, as well as chairman of the VMware board. Zane Rowe would remain interim VMware CEO. The VMware board would be unchanged.

DELL is currently trading at $92.70, up $0.17 or 0.18%, on the Nasdaq. The stock further rose $7.61 or 8.21% in the after-hours trading.

For comments and feedback contact: editorial@rttnews.com

Business News

Editors Pick
Swiss luxury goods group Compagnie Financiere Richemont AG reported Friday significantly higher profit in fiscal 2022 with strong growth in demand. The company also lifted its dividend, and announced a special dividend. Meanwhile, the shares were losing around 12 percent in the morning trading in Switzerland. Coeurd-Alene, Idaho-based White Cane Smoked Salmon LLC is recalling Wild Alaskan Cooked and Smoked Salmon as it contains undeclared wheat and soy, known allergens, the U.S. Food and Drug Administration said. The affected Alaskan Cooked and Smoked Salmon is packaged in vacuum bag, sold frozen, and there is no lot code or best by date on a package. Auto giant Ford Motor Co. (F) has issued a recall of about 39,000 2021 Expedition and Lincoln Navigator vehicles due to fire risk. The company has asked the customers of the recalled 2021 Ford Expedition and Lincoln Navigator SUVs to park their vehicles outside and away from structures while it investigates...
Follow RTT