(Reuters) – Dell Technologies Inc (DELL.N) is considering spinning off its 81% stake in cloud computing software maker VMware (VMW.N), the PC maker said on Wednesday, adding that such a move would not occur before September next year.

The company said the evaluation was in an early stage and it was looking at options including keeping its current ownership.

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.

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.

Shares of Dell jumped 8%, while VMware rose 5% in aftermarket trading.

VMware is currently Dell’s best performing unit as it benefits from companies looking to cut costs move to the cloud, a shift that is being speeded up by the coronavirus pandemic.

It had last year bought two providers of cloud security and developer services in deals that together valued at about $5 billion.

The unit’s revenue increased 12% in the latest reported quarter, even as Dell’s total revenue growth dipped.

The PC maker had returned to public markets in 2018, nearly six years after the company’s founder and Chief Executive Officer Michael Dell took it private in what was then the biggest buyout since the financial crisis of 2008. It happened after Dell bought back shares that tracked the financial performance of VMware in a deal worth nearly $24 billion.

Reporting by Neha Malara and additional reporting by Arundhati Sarkar; Editing by Arun Koyyur

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

U.S. private payrolls tumble by a record 20.2 million in April

WASHINGTON (Reuters) – U.S. private employers laid off a record 20.236 million workers in April as mandatory business closures in response to the novel coronavirus outbreak savaged the economy, setting up the overall labor market for historic job losses last…

Geely cuts sales goal despite increased market share

China’s Geely Auto trimmed its sales goal for the year on Monday as the coronavirus pandemic has hurt the financial performance of the Hong Kong-listed carmaker. The company scaled down its sales target to 1.32 million vehicles, down from 1.41…

US economy suffers sharpest drop ever as GDP crashes nearly 32% during coronavirus peak

The latest US gross domestic product (GDP) reading is slightly better than the estimate issued last month, when the agency said that the world’s largest economy shrank at an annual rate of 32.9 percent in the April-June period. Despite the…

This social network wants you to interact IRL, but may spark a new privacy concern

New York (CNN Business)For many people, social media is synonymous with endless scrolling, constant distractions and blatant attempts to rack up comments, likes and views. But Justin Fuisz is betting on a different kind of social network — one that…