Dell has announced its planned divestiture of VMWare that will ultimately form two separate public companies but will continue to co-develop solutions for customers.
According to an announcement, Dell is planning to spin off its 81% equity interest in VMWare, making VMWare fully independent while maintaining a business relationship through a commercial agreement “that will preserve the companies’ unique and differentiated approaches to the co-development of critical solutions and alignment on sales and marketing activities.”
However, the deal also allows VMWare to pursue other partnerships with other cloud and on-premise vendors.
VMWare will also continue to use Dell Financial Services to help customers finance their digital transformation projects, according to Dell.
In a statement, Dell Chairman and CEO Michael Dell said spinning off VMWare will provide growth opportunities for both companies and their shareholders.
“Both companies will remain important partners, providing Dell Technologies with a differentiated advantage in how we bring solutions to customers,” Dell said. “At the same time, Dell Technologies will continue to modernize its core infrastructure and PC businesses and embrace new opportunities through an open ecosystem to grow in hybrid and private cloud, edge and telecom.”
Meanwhile, VMWare looks to create an “ubiquitous software and SaaS platform across all clouds and hardware infrastructure” to help accelerate digital transformation.
Separating from Dell gives the company more freedom to execute its strategy, a simplified capital structure and governance model, and other flexibilities.
In a statement, Zane Rowe, chief financial officer and interim CEO of VMWare, said the company can now extend its ecosystem across all cloud vendors and on-prem vendors.
“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,” Rowe said.
The deal is expected to close in the fourth quarter subject to approvals.