Dell has announced it is divesting its 81% stake in VMware. Dell is not letting go of the company though. Michael Dell will become chairman of the VMware board. The sale of the stake is expected to bring Dell between $9.3 billion and $9.7 billion. That money will be used to pay off Dell’s debts.
Dell got their hands on VMware when they acquired EMC in 2016, which had been the parent organization of VMWare since 2004.
The decision to split the organization was made by mutual agreement in order to chart their own strategic course. CEO Michael Dell will remain on the board of directors in order to maintain good cooperation as independent partners.
Dell and VMware will continue to work together on solutions in the future. Dell expects to complete the transaction by the fourth quarter of 2021.
“By spinning off VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders,” said Michael Dell, chairman of the board, VMware. “Both companies will remain important partners, with a differentiated advantage in how we bring solutions to customers.”
Since its founding in 1998, VMware has almost never had to manage on its own. EMC acquired VMware in 2004, while since 2016 Dell has swung the baton. It is not yet known if any parties have been approached to take over the shares.
According to their official statement, a spin-off from Dell Technologies would provide VMware increased freedom to execute its strategy, a simplified capital structure and governance model and additional strategic, operational and financial flexibility, while maintaining the strength of the two companies’ strategic partnership.
New VMware Leadership?
Zane Rowe will take over as interim CEO of VMware until a replacement has been found. VMware has been looking for a replacement since January 2021, after Pat Gelsinger was lured away by Intel after 8 years. No names of successors have yet been officially named. Analysts see Jim Whitehurst of IBM/Red Hat as a logical successor. But the new CEO could just as easily be promoted internally.
“We will have an enhanced ability to extend our ecosystem across all cloud vendors and on-premises infrastructure vendors and a capital structure that will support growth opportunities,” said Zane Rowe, chief financial officer and interim chief executive officer, VMware. “Our strategic partnership with Dell Technologies remains a differentiator for us, and, as we execute on our multi-cloud strategy, we continue to provide customers our solutions and services on any public cloud and any infrastructure.”