Dell to spin off VMware stake in deal worth up to $9.7 billion

© Reuters. The logo for Dell Technologies Inc. is displayed on a screen on the floor of the New York Stock Exchange in New York

(Reuters) – Dell Technologies Inc said on Wednesday it would spin off its 81% stake in cloud computing software maker VMware, creating two standalone public companies.

VMware will distribute a special cash dividend of between $11.5 billion and $12 billion to all of its shareholders, including Dell. The PC maker is estimated to receive between $9.3 billion to $9.7 billion from the spinoff.

Dell stockholders would receive about 0.44 shares of VMware for each of their shares.

The companies said the deal will simplify their capital structures. Both firms will enter into a commercial arrangement to continue to align sales activities and for co-development of solutions.

Dell shares were up nearly 7% in extended trading.

The spinoff plans were originally announced by Dell in July last year. The deal is expected to close in the fourth quarter.

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