By Micah Maidenberg 

Dell Technologies Inc. said Wednesday it would spin off its stake valued at $52 billion in cloud-software company VMware Inc., in a deal the personal-computer maker said would strengthen its financial position as it looks at new markets and works to reach clients revamping their digital strategies.

Dell said VMware would pay a special cash dividend tied to the spinoff of $11.5 billion to $12 billion to the company's shareholders, including $9.3 billion to $9.7 billion for Dell itself. Dell holds roughly an 81% stake in VMware. The company said it intends to use net cash from the dividend to pay down debt.

Shareholders in Dell are to receive roughly 0.44 share of VMware for each share of Dell they own.

The Wall Street Journal reported in June that Dell was considering a spinoff of its stake in VMware in an effort to boost the value of the PC maker's shares.

Shares of Dell gained 8.4% in after-hours trading. VMware's stock ticked down slightly, according to FactSet.

The spinoff is expected to be complete in the fourth quarter.

"With an even stronger capital structure, Dell Technologies is poised to further capitalize on the rebound in infrastructure and PC spend," Dell said in a written statement about the spinoff.

Write to Micah Maidenberg at micah.maidenberg@wsj.com

 

(END) Dow Jones Newswires

April 14, 2021 17:28 ET (21:28 GMT)

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