Dell said Wednesday it may spin off VMware, the software powerhouse it acquired five years ago in the EMC merger. Dell currently owns 81% of VMware.Dell said the plan would benefit shareholders, customers and partners of both companies, but would not happen before September 2021 to minimize federal tax implications.However, Dell said it is also considering other options, including maintaining its ownership of VMware.Visit Business Insider’s homepage for more stories
Dell is considering splitting from VMware, just five years after the tech giant acquired the enterprise software powerhouse.The Texas tech giant announced Wednesday that it is exploring “a potential spin-off of its 81% ownership” of VMware which it bought in 2015 through a merger with EMC. VMware had been owned by the data storage company.Dell’s acquisition of EMC and VMware transformed it into a bigger tech player, but the transaction saddled the company with a sizeable debt. Dell said a spinoff could be beneficial to both Dell and VMware shareholders, customers and partners. But such a move would not happen before September 2021 in order “to qualify as tax-free for US federal income tax purposes.”
Dell said it is also considering other options, including maintaining its VMware ownership.”Regardless of the options we are exploring to create additional value, we are accelerating our strategy, which remains unchanged,” Dell CEO Michael Dell said in a statement. “We are focused on winning in the consolidating markets where we operate.”Dell shares rallied more than 7% in after-hours trading.Got a tip about Dell or another tech company? Contact this reporter via email at [email protected], message him on Twitter @benpimentel or send him a secure message through Signal at (510) 731-8429. You can also contact Business Insider securely via SecureDrop.
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