<p>Dell Technologies Inc is considering spinning off its 81% stake in cloud computing software maker VMware, the PC maker said on Wednesday, adding that such a move would not occur before September 2021.</p>.<p>The company said the evaluation was in an early stage and it was looking at options including keeping its current ownership.</p>.<p>VMware said a spinoff could result in a simpler capital structure and it has formed a special committee for talks with the corporate computing giant.</p>.<p>In case of a spinoff, Dell said it would negotiate payment of a special cash dividend by VMware to all its shareholders and would try to formalize commercial arrangements similar to those in place, including intellectual property agreements.</p>.<p>If the VMware spinoff proceeds as Dell plans, the PC maker would receive a pro-rated portion of a special dividend to help reduce its debt of $57.3 billion, much of which was taken on during the 2016 acquisition of VMWare's then-majority owner EMC. VMware could also issue additional debt as part of a transaction.</p>.<p>The two sides intend to begin talks well ahead of September 2021, when such a deal would become tax-free under US tax laws.</p>.<p>Shares of Dell jumped 8%, while VMware rose 5% in aftermarket trading.</p>.<p>Any deal would require VMware shareholder approval. Other options including an outright sale and maintaining the status quo are likely to be considered, according to a source familiar with the matter.</p>.<p>VMware is currently Dell's best-performing unit as it benefits from companies looking to cut costs and move to the cloud, a shift that is being hastened by the coronavirus pandemic.</p>.<p>VMWare last year bought two providers of cloud security and developer services in deals that together were valued at about $5 billion.</p>.<p>The unit's revenue increased 12% in the latest reported quarter, even as Dell's total revenue growth dipped.</p>
<p>Dell Technologies Inc is considering spinning off its 81% stake in cloud computing software maker VMware, the PC maker said on Wednesday, adding that such a move would not occur before September 2021.</p>.<p>The company said the evaluation was in an early stage and it was looking at options including keeping its current ownership.</p>.<p>VMware said a spinoff could result in a simpler capital structure and it has formed a special committee for talks with the corporate computing giant.</p>.<p>In case of a spinoff, Dell said it would negotiate payment of a special cash dividend by VMware to all its shareholders and would try to formalize commercial arrangements similar to those in place, including intellectual property agreements.</p>.<p>If the VMware spinoff proceeds as Dell plans, the PC maker would receive a pro-rated portion of a special dividend to help reduce its debt of $57.3 billion, much of which was taken on during the 2016 acquisition of VMWare's then-majority owner EMC. VMware could also issue additional debt as part of a transaction.</p>.<p>The two sides intend to begin talks well ahead of September 2021, when such a deal would become tax-free under US tax laws.</p>.<p>Shares of Dell jumped 8%, while VMware rose 5% in aftermarket trading.</p>.<p>Any deal would require VMware shareholder approval. Other options including an outright sale and maintaining the status quo are likely to be considered, according to a source familiar with the matter.</p>.<p>VMware is currently Dell's best-performing unit as it benefits from companies looking to cut costs and move to the cloud, a shift that is being hastened by the coronavirus pandemic.</p>.<p>VMWare last year bought two providers of cloud security and developer services in deals that together were valued at about $5 billion.</p>.<p>The unit's revenue increased 12% in the latest reported quarter, even as Dell's total revenue growth dipped.</p>