When Dell announced it was spinning out VMware yesterday, the move itself wasnt surprising; there had been public speculation for some time. But Dell could have gone a number of ways in this deal, despite its choice to spin VMware out as a separate company with a constituent dividend instead of an outright sale.
The dividend route, which involves a payment to shareholders between $11.5 billion and $12 billion, has the advantage of being tax-free (or at least thats what Dell hopes as it petitions the IRS). For Dell, which owns 81% of VMware, the dividend translates to somewhere between $9.3 billion and $9.7 billion in cash, which the company plans to use to pay down a portion of the huge debt it still holds from its $58 billion EMC purch…
Read the full article at: https://techcrunch.com/2021/04/15/should-dell-have-pursued-a-more-aggressive-debt-reduction-move-with-vmware/
