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Dell’s VMware Stock Spin-off To Shareholders: 5 Things To Know

Here are the five most important things customers and channel partners should know about Dell Technologies proposal to spin off its 81 percent stake in VMware.

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Why This Plan Will Likely Happen In Late 2021

In order for the spin-off to happen, VMware’s board of directors must approve the plan. Michael Dell is the chairman of VMware’s board, while Silver Lake’s co-CEO Egon Durban is also a board member.

Additionally, VMware has already publicly said that the proposal will likely enhance the company’s market value.

“Although the process is only at an exploratory stage, VMware believes that a spin-off may be value-enhancing to VMware and its stockholders and could result in a simpler capital structure and a broader stockholder base, provide greater strategic flexibility and address certain governance arrangements, while still maintaining a mutually beneficial strategic and commercial partnership with Dell, which includes supporting our numerous joint customers,” said VMware in a 8-K filing with the SEC.

The spin-off of its VMware stake to Dell Technologies shareholders will not occur before September 2021, Dell confirmed, as the company seeks to get the deal to qualify as tax-free for federal income tax purposes. This means Dell has more than a year to finalize the deal and work out any issues or hurdles that arise from shareholders.

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