Dell spins off VMware in $64bn software push
Deal helps VMware regain corporate independence after 18 years
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In one of the largest corporate spin-offs ever seen,DellTechnologies has revealed it will let go of its 81% stake invirtualizationgiantVMware, to essentially help create an independent publicly traded software company that boasts of a stock market value of nearly $64 billion.
News of thedemerger first came to lightearlier this year in April, 2021. Reporting on the completion of the process, theFinancial Timessays that the move has helpedDell’s founder turn around thePCmanufacturer into a broader and significant player in thedata centerhardware and software segment worth $40 billion.
On the other hand, the demerger also sees VMware regain corporate independence about 18 years after its acquisition by EMC for less than $1 billion.
The separation from Dell will free VMware from EMC’s focus on corporate data centres, and give it more freedom to invest and make acquisitions focusing oncloud computing, Sumit Dhawan, VMware’s president toldFT.
One for the books
Founded in 1984, Dell initially went public in 1988, before one of the largest leveraged buyouts ever seen put it back into the private ownership of Michael Dell in 2013. After buying EMC, the company undertook a complex financial move to become public again to help the company raise funds.
Dell had to reportedly borrow about $70 billion to finance its deal-making, which has been weighing it down. As part of the spin-off, VMware will pay a special dividend to shareholders totaling about $12 billion, which according toFTwill help Dell take a chunk off the remaining debt load.
After the spin-off, Dell will be “a simpler company with a better capital structure”, Krish Sankar, an analyst at Cowen, toldFT.
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With almost two decades of writing and reporting on Linux, Mayank Sharma would like everyone to think he’sTechRadar Pro’sexpert on the topic. Of course, he’s just as interested in other computing topics, particularly cybersecurity, cloud, containers, and coding.
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