ROUND ROCK, Texas, July 15, 2020 /PRNewswire/ --
- Dell Technologies is exploring a potential spin-off of its 81%
ownership of VMware. Potential deal could unlock value for
shareholders
- To benefit team members, customers and partners with industry
leading solutions, in the event of a spin-off, Dell Technologies
will seek to maintain the mutually beneficial strategic
relationship currently in place with VMware
- In the event of a spin-off, Dell Technologies intends to
negotiate terms consistent with an investment grade rating for both
companies
Dell Technologies (NYSE:DELL) is exploring a potential spin-off
of its 81% equity ownership interest in VMware (NYSE:VMW). Although
this exploration is in an early stage, Dell Technologies believes a
spin-off could benefit both Dell Technologies and VMware
shareholders, team members, customers and partners by simplifying
capital structures and creating additional long-term enterprise
value. Any potential spin-off would not occur prior to September 2021 and would be intended to qualify
as tax-free for U.S. federal income tax purposes.
Additionally, Dell Technologies continues to evaluate a range of
strategic options concerning its ownership interest in VMware,
including maintaining its current ownership in the company.
"The strategic relationship between Dell Technologies and VMware
has never been stronger," said Michael
Dell, chairman and chief executive officer, Dell
Technologies. "For more than 20 years, we've innovated for our
customers and created substantial growth and value for both
companies and our teams. Regardless of the options we are exploring
to create additional value, we are accelerating our strategy -
which remains unchanged. We are focused on winning in the
consolidating markets where we operate and innovating across the
Dell Technologies portfolio to create integrated solutions that
turn data into insights and action."
As part of its exploration of a potential spin-off, Dell
Technologies expects it would seek to formalize mutually beneficial
commercial arrangements similar to those currently in place. This
includes go-to-market, services, research and development, and
intellectual property agreements between Dell Technologies and
VMware, providing ongoing strategic benefits and continued support
for customers of both companies following any spin-off.
If it determines to pursue a spin-off, Dell Technologies also
expects to negotiate and agree to certain related terms and
conditions with a special committee of the Board of Directors of
VMware and the Board of Directors of VMware. In that event Dell
Technologies would look to negotiate the payment of a special cash
dividend by VMware that would be paid on a pro rata basis to all
VMware shareholders.
It is important to Dell Technologies that both companies have
appropriate capital structures immediately following any
spin-off. Dell Technologies' goal would be to maintain
VMware's credit rating of investment grade and improve Dell
Technologies' credit rating at the time of or shortly following a
potential spin-off and accelerate the timeline through which Dell
Technologies can achieve an investment grade credit rating.
However, Dell Technologies can give no assurance that any specific
ratings would ultimately be obtained for either company in the
event of a spin-off.
Dell Technologies is the market leader and continues to gain
share through its growing client and infrastructure businesses,
including PCs, peripherals, mainstream servers, external storage,
and cloud. "No other company can match the depth and breadth of
Dell Technologies' portfolio. Our business is strong and has runway
to grow for decades to come," said Michael
Dell.
Additional information regarding this announcement can be found
in the amended Schedule 13D filed by Dell Technologies with the
United States Securities and Exchange Commission (SEC) on
July 15, 2020.
About Dell Technologies
Dell Technologies (NYSE:DELL) helps organizations and
individuals build their digital future and transform how they work,
live and play. The company provides customers with the industry's
broadest and most innovative technology and services portfolio for
the data era.
Special Note on Forward-Looking Statements:
Statements in this press release that relate to future results
and events are forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 and Section 27A
of the Securities Act of 1933 and are based on Dell Technologies'
current expectations. The words "may," "will," "anticipate,"
"estimate," "expect," "intend," "plan," "aim," "seek," and similar
expressions that refer to future events or outcomes are intended to
identify these forward-looking statements, which include, among
others, statements relating to Dell Technologies' exploration of
potential alternatives with respect to its ownership interest in
VMware, including a possible spin-off, and the potential terms of
any such transaction, including the amount of a special cash
dividend by VMware and the terms of the commercial relationship
between Dell Technologies and VMware following any such
transaction.
Dell Technologies' results or events in future periods could
differ materially from those expressed or implied by these
forward-looking statements because of risks, uncertainties, and
other factors that include, but are not limited to, the risks
inherent in any transaction involving Dell Technologies' ownership
interest in VMware, including a possible spin-off (which risks
include uncertainties related to, among other things, whether Dell
Technologies will determine to pursue and negotiate the terms of
any such transaction; whether any agreement will be reached to
proceed with any such transaction; the final terms and conditions
of any such transaction if such an agreement is reached, including
the amount of a special cash dividend by VMware and the terms of
any ongoing commercial agreements and arrangements between Dell
Technologies and VMware following any such transaction; the costs
and expected benefits of any such transaction; the timing of any
such transaction or whether it will be completed; whether any
conditions to any such transaction can be satisfied; the expected
tax treatment of any such transaction; and the impact of any such
transaction on the businesses of Dell Technologies and VMware and
the relationship between the two companies following any such
transaction). This list of risks, uncertainties, and other
factors is not complete. Dell Technologies discusses risks,
uncertainties, and other factors more fully, including certain risk
factors that could affect Dell Technologies' business, financial
condition, results of operations, and prospects, in its reports
filed with the SEC, including Dell Technologies' annual report on
Form 10-K for the fiscal year ended January
31, 2020, quarterly reports on Form 10-Q, and current
reports on Form 8-K. These filings are available for review through
the SEC's website at www.sec.gov. Any or all forward-looking
statements Dell Technologies makes may turn out to be wrong and can
be affected by inaccurate assumptions Dell Technologies might make
or by known or unknown risks, uncertainties and other factors,
including those identified in this press release. Accordingly, you
should not place undue reliance on the forward-looking statements
made in this press release, which speak only as of the date such
statements are made. Dell Technologies does not undertake to update
any forward-looking statement after the date as of which such
statement was made, whether to reflect changes in circumstances or
Dell Technologies' expectations, the occurrence of unanticipated
events, or otherwise.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/dell-technologies-explores-vmware-spin-off-301094362.html
SOURCE Dell Technologies