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Dell evaluating spinoff of 81% stake in VMware

Credit: REUTERS/BRENDAN MCDERMID

Dell Technologies Inc is considering a spinoff of its 81% stake in VMware, the PC maker said on Wednesday, adding that such a move would not occur before September next year.

Adds VMware statement, background, shares

July 15 (Reuters) - Dell Technologies Inc DELL.N is considering a spinoff of its 81% stake in VMware VMW.N, the PC maker said on Wednesday, adding that such a move would not occur before September next year.

The company said the evaluation was in an early stage and it was looking at options including maintaining its current ownership.

VMware said a spin-off could result in a simpler capital structure and that it has formed a special committee to take forward discussions with Dell.

Dell shares jumped 7%, while VMware rose 5% in aftermarket trading.

VMware is currently Dell's best performing unit as the business benefits from companies looking to cut costs move to the cloud, a shift that is being speeded up by the coronavirus pandemic.

The unit's revenue increased 12% in the latest reported quarter, even as Dell's total revenue growth dipped.

(Reporting by Neha Malara; Editing by Aditya Soni and Arun Koyyur)

((neha.malara@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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