What’s going on with DELL?
Dell Technologies (DELL) stock was up 7.8% in Thursday afternoon’s trading session on its plan to spin-off VMWare (VMW), which will include an $11.5 billion to $12 billion special cash dividend. Dell shares were trading at $99.93, while VMWare gained 3.04% to trade at $160.22 per share.
What does it mean for Dell Technologies?
Dell Technologies (DELL) is separating VMWare (VMW) but the two companies will continue doing business, as Michael Dell and Silver Lake Partners have direct interests in VMWare and the companies have a commercial agreement to continue their strategic partnership.
The purpose for the spin-off, which is expected to be completed in the fourth quarter, is to give “VMWare increased freedom to execute its strategy, a simplified capital structure and governance model,” per a press release.
“By spinning off VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders," Michael Dell, chairman of the board, VMware, added. “Both companies will remain important partners, with a differentiated advantage in how we bring solutions to customers.”
The special cash dividend of $11.5-$12 billion that VMware will distribute to all stockholders ranges from $27.43 per share to $28.62 per share, based on outstanding shares as of March 16, 2021.
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Dell Technologies, born from Dell's 2016 acquisition of EMC, is a leading provider of servers and storage products through its ISG segment; PCs, monitors, and peripherals via its CSG division; and virtualization software through VMware. Its brands include Dell, Dell EMC, VMware, Boomi, Secureworks, and Virtustream. The company focuses on supplementing its traditional mainstream servers and PCs with hardware and software products for hybrid-cloud environments. The Texas-based company employs around 145,000 people and sells into 180 countries.
