Dell Technologies Soar Thanks to VMware Share Spin Off
Dell Technologies’ share prices are on the move this Tuesday thanks to the news about a possible spin off on its VMware shares. The computer maker’s stocks are recording one of the biggest moves today.
According to a recently released report, the company is looking at options for its VMware shares. An unidentified source close to the matter said that the company is on its initial stage of the process.
The report says that the computer maker is looking to buy out most of the minority shares from VMware that it doesn’t hold.
The report helped bullish investors of both Dell and VMware push prices higher. The computer maker was rallying by more than 20% this Tuesday.
Meanwhile, VMware share prices are going up by more than 11% in the stock market.
Both of the companies have denied giving any comments about the matter. Reports say that policies from the companies prohibit any comments about market speculations.
In VMware’s recent earnings report, it stated that about 81% of VMW outstanding common stocks are held by Dell. That percentage is about $50 billion.
Also, the computer maker has about 97% in combined voting power of the software developer’s outstanding common stocks.
The move should potentially increase the market value of the American multinational corporation.
Since the year began, Dell took harsh blows from the pandemic. Share prices were down by 5% thanks to coronavirus.
The spin-off attempt could help the technology company get back into positive territories. Investors are now closely eyeing the matter and are waiting for further updates about the news.
Before Going Public
After deciding to go private back in 2013, the company went public again two years ago. Back in 2018, the computer maker returned in the public market, DELL shares made their way to stock trading.
And one option before that initial public offering is a reverse merger with VMware Inc.
VMware was looking to buy Dell shares according to reports. But that plan didn’t end up going through.
And before that, the computer maker originally planned to pick up VMware shares through the $67 billion acquisition.
Fast forward to the present time, the report still said that there is still a chance that Dell won’t pursue the spin-off. Adding that any decision from the technology company isn’t expected before 2021.
The move also didn’t surprise some experts as it was already anticipated by some. An expert said that the move overshadows some of the company’s advances like acquisitions.