VMware has completed its spin-off from Dell to officially become a standalone company once again, allowing Dell to raise cash to pay off its debts and giving VMware more business flexibility.
Dell shed its 81% equity ownership in the company, which will create an independent company with a stock market value of around $64 billion. VMware has distributed a special cash dividend of $11.5 billion to all VMware shareholders, including Dell which has received $9.3 billion that will be used to pay down debt. Michael Dell will remain chair of the VMware board, and the rest of its directors remain unchanged.
The companies said that they will continue to retain a strong and unique commercial agreement that preserves their relationship, including the co-development of critical solutions and alignment on sales and marketing activities. VMware will also continue to use Dell Financial Services to help its customers finance digital transformation.
Raghu Raghuram, VMware CEO, said that as a standalone company, VMware now has the flexibility to partner even more deeply with all cloud and on-premises infrastructure companies to create a better foundation to drive results for its customers. He added that it will also have increased flexibility to use equity to complete future acquisitions, allowing the company to remain competitive.
He said the move will strengthen VMware’s mission to be “the Switzerland of the cloud industry”, uniquely positioned to provide its customers with the best combination of options as it grows its partner ecosystem.
Raghuram added that the company will continue to work closely with Dell, providing products for customers through its new commercial agreement, in particular its channel synergies, partner, and go-to-market programmes.
“I’m confident this next step in the VMware journey will enhance our ability to deliver the trusted foundation that our customers rely on to accelerate innovation,” said Raguram. “That is and will remain our top priority.”
In April this year, Dell was set to spin off its 81% stake in VMware to create two separate entities to generate billions of dollars in cash to pay down its debt. This was a reversal of the move from 2016 in which Dell merged with VMware’s parent company EMC in a $67 billion deal. The merger allowed the hardware giant to branch out when it came to business pursuits but resulted in it taking on substantial debt.
