Sales and marketing, Enterprise, Content

Dell-VMware Spin Off Plan: Details Confirmed

Dell Technologies has confirmed plans to spin off VMware, forming two standalone public companies that will continue to trade as $Dell and $VMW. The spin-off, which was under discussion for several quarters, will help the PC giant to pay down debt.

Dell owns an 81 percent stake in VMware. Dell gained the financial relationship when the company acquired EMC in September 2016.

Under terms of the planned spin-off, VMware will distribute a cash dividend of $11.5 billion to $12 billion to all VMware shareholders, including Dell Technologies, the companies say. Dell would receive approximately $9.3 billion to $9.7 billion and intends to use the net proceeds to pay down debt.

The spin-off is expected to close during the fourth quarter of calendar 2021, pending a favorable IRS ruling, Dell says.

Dell and VMware: Maintaining Channel Partner Synergies

For channel partners, it's important to note that Dell and VMware will "enter into a commercial agreement that will preserve the companies' unique and differentiated approaches to the co-development of critical solutions and alignment on sales and marketing activities. VMware will continue to use Dell Financial Services to help its customers finance their digital transformations," the companies say.

In a prepared statement, Dell CEO Michael Dell said:

"By spinning off VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders. Both companies will remain important partners, providing Dell Technologies with a differentiated advantage in how we bring solutions to customers. At the same time, Dell Technologies will continue to modernize its core infrastructure and PC businesses and embrace new opportunities through an open ecosystem to grow in hybrid and private cloud, edge and telecom."

VMware: Interim CEO Remains In Place

Michael Dell continues to lead the PC giant, and will also remain chairman of VMware's board, post spin-off. Zane Rowe will remain interim CEO of VMware, as the virtualization company continues to evaluate permanent CEO options to succeed Pat Gelsinger -- now at Intel.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.