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Africa Housing News > News > We’re Driving Additional Growth Opportunities, Says Dell Technologies’ CEO
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We’re Driving Additional Growth Opportunities, Says Dell Technologies’ CEO

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Last updated: 2021/04/19 at 11:10 AM
Fesadeb 3 years ago
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By Akanimo Sampson

Chairman and Chief Executive Officer of Dell Technologies, Michael Dell, says they are expecting to drive additional growth opportunities for the company.

Dell Technologies is planning to spin off its 81% equity ownership interest in VMware, in a move that will make the software arm a fully independent company.

The transaction is expected to close during the fourth quarter of calendar 2021, subject to certain conditions, including receipt of a favourable IRS private letter ruling and an opinion that the transaction will qualify as generally tax-free for Dell Technologies shareholders for US federal income tax purposes.

Dell Technologies 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.

Dell acquired VMware as part of the massive $67 billion EMC acquisition in 2016.

According to Dell’s CEO, “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 modernise its core infrastructure and PC businesses and embrace new opportunities through an open ecosystem to grow in hybrid and private cloud, edge and telecom.

“By spinning off VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders.”

Upon completion of the spin-off, Michael Dell will remain chairman and chief executive officer of Dell Technologies, as well as chairman of the VMware board. Zane Rowe will remain interim CEO of VMware, and the VMware board of directors will remain unchanged.

At the transaction closing, VMware will distribute a special a cash dividend of $11.5 – $12 billion to all VMware shareholders, including Dell Technologies.

Based on Dell Technologies’ current 80.6% ownership in VMware, Dell Technologies would receive approximately $9.3 – $9.7 billion and intends to use the net proceeds to pay down debt, positioning the company well for Investment Grade ratings.

With an even stronger capital structure, Dell Technologies is poised to further capitalise on the rebound in infrastructure and PC spend, new cloud operating models driving as-a-Service growth, compute moving to the edge, and customers’ longer-term digital transformation initiatives.

With a strong commercial agreement in place, Dell Technologies will have the ability to continue to work closely with VMware to drive innovation and preserve go-to-market synergies while generating new growth opportunities through an open ecosystem.

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