Dell Technologies will spin off its 81% majority stake in virtualization giant VMware, the company announced Wednesday. The move will create two standalone public companies, with Michael Dell remaining chairman and CEO of Dell Technologies, as well as chairman of the VMware board.
Zane Rowe will remain interim CEO of VMware as the search for a permanent chief executive continues.
In its investor presentation, Dell Technologies outlined what it sees as the benefits and rationale behind the transaction. In a nutshell, Dell views the spin-off as a way to give each company more strategic flexibility and improve capital structure efficiencies, while also maintaining VMware’s credit rating and improving its own. Dell plans to use the VMware proceeds — estimated to come in between $9.3 billion and $9.7 billion — to pay down its debt.