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VMware’s Spin-Off From Dell Is Nearing: 8 Huge Things To Know

From VMware’s $11.5 billion special dividend payout to Dell and M&A ahead, to how shareholders and Dell will benefit, here are eight big things you need to know about Dell Technologies’ spin-off of VMware set to be complete Nov. 1.

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VMware Will Acquire More Companies

VMware as an independent company will be able to fund and conduct more acquisitions to drive growth with CEO Raghu Raghuram expecting more cloud-based M&A ahead.

“VMware has historically grown its business through acquisitions. Currently, VMware faces constraints in issuing additional equity for use in acquisitions due to potential deconsolidation of VMware from Dell Technologies and its subsidiaries if Dell Technologies does not own a certain percentage of VMware. As such, VMware has often not been able to issue equity to facilitate such acquisitions,” said the two companies in a filing with the SEC. “The separation of Dell Technologies and VMware is expected to better position VMware to issue equity to fund future acquisitions.”

In fact, VMware’s Raghuram told CRN in a recent interview about VMware’s acquisition strategy post-Dell.

Raghuram said VMware will acquire companies that fit into its multi-cloud strategy and that the “frequency” of smaller acquisitions in multi-cloud will pick up because VMware’s capital structure will be more flexible.

“Where we are today in our evolution is we are building out this multi-cloud portfolio that we’ve talked about. We will continue to acquire companies that fit into this portfolio,” said Raghuram in an interview with CRN. “So that’s where I expect the bulk of our [M&A] activity to come from. I expect continued activity with respect to small, tiny tuck-ins of companies as we see fit.”

 

 
 
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