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(Reuters) — Dell Applied sciences mentioned on Wednesday it might spin off its 81% stake in cloud computing software program maker VMware to create two standalone public corporations, in a transfer that can assist the PC maker cut back its pile of debt.

VMware is at the moment Dell’s best-performing unit because it has benefited from corporations trying to minimize prices and transfer to the cloud, a shift that has been accelerated by the COVID-19 pandemic.

Shares of Dell rose greater than 8% in prolonged buying and selling.

VMware will distribute a particular money dividend of between $11.5 billion and $12 billion to all of its shareholders, together with Dell, which is able to obtain between $9.3 billion and $9.7 billion.

For Dell, the particular dividend will assist cut back its long-term debt of $41.62 billion, a lot of which was taken on throughout its $67 billion acquisition of VMWare’s then-majority proprietor EMC in 2016.

The businesses mentioned the deal will simplify their capital constructions. Each corporations will even enter right into a business association to proceed to align gross sales actions and for co-development of options.

VMware, whose software program helps corporations squeeze extra work out of knowledge heart servers, has been on the lookout for a chief govt officer after earlier boss Pat Gelsinger was tapped to steer Intel.

The spinoff plans had been initially introduced by Dell in July final yr. The deal is anticipated to shut within the fourth quarter.

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