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VMware and Dell Technologies Announce Spin-Off Agreement; Zane Rowe Quoted

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The VMware Special Committee of independent directors and Dell Technologies announced that they have agreed to terms for VMware to be spun-off from Dell Technologies on Wednesday. The terms will simplify the corporate structure and include an $11.5-12.5 billion special cash dividend declared by the VMware Board to all VMware stockholders just before the spin-off and subject to all closing conditions' satisfaction. 

Additionally, VMware stockholders will receive a pro-rata distribution of VMware shares held by Dell Technologies. Michael Dell and Silver Lake Partners will own direct interests in VMware. Dell and VMware also finalized a commercial agreement that sustains and strengthens their strategic partnership to deliver joint customer value.

“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, with a differentiated advantage in how we bring solutions to customers,” commented Michael Dell, VMWare's chairman of the board.

VMware aims to create a universal software and SaaS platform across all clouds and hardware infrastructure to accelerate clients’ digital transformation. As a spin-off from Dell, the company will have increased freedom to execute strategy, simplified capital structure and financial flexibility. 

The $11.5 billion to $12.0 billion special cash dividend that VMware will give to all stockholders is based on outstanding shares as of March 16th, 2021. The price per share ranges from $27.43 to $28.62. 

 “We will have an enhanced ability to extend our ecosystem across all cloud vendors and on-premises infrastructure vendors and a capital structure that will support growth opportunities. Our strategic partnership with Dell Technologies remains a differentiator for us, and, as we execute on our multi-cloud strategy, we continue to provide customers our solutions and services on any public cloud and any infrastructure,” added Zane Rowe, VMware’s chief financial officer and interim chief executive officer.

The transaction is expected to close during the fourth quarter of calendar 2021, subject to certain conditions.

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