8-KMaterial AgreementsRegulation FDExhibits & Filings

Dell Technologies Inc. 8-K Report, Material Agreement (Apr 14, 2021)

Filed April 14, 2021For Securities:DELL

Summary

This 8-K filing announces a significant strategic move by Dell Technologies Inc. (DELL) involving its majority-owned subsidiary, VMware, Inc. Dell has entered into a Separation and Distribution Agreement to separate VMware's businesses from Dell's remaining operations. This separation will result in Dell's stockholders owning shares in two distinct, publicly traded companies: the spun-off VMware and the remaining Dell Technologies. A key component of this transaction includes a substantial cash dividend of between $11.5 billion and $12 billion to be paid by VMware to Dell before the separation is finalized. This dividend will be distributed to Dell's stockholders as part of the overall separation process. The transaction is subject to various conditions, including regulatory approvals, tax rulings, and the absence of material adverse effects on VMware.

Key Highlights

  • 1Dell Technologies Inc. has entered into a definitive agreement to separate its majority-owned subsidiary, VMware, Inc.
  • 2The separation will result in Dell's stockholders owning shares in two separate public companies: VMware and the remaining Dell Technologies.
  • 3VMware will distribute a special cash dividend to Dell, estimated to be between $11.5 billion and $12 billion, prior to the separation.
  • 4The dividend proceeds are expected to be distributed to Dell's stockholders.
  • 5The transaction is contingent upon several conditions, including obtaining favorable tax rulings from the IRS and regulatory approvals.
  • 6A Commercial Framework Agreement will be established to govern the ongoing strategic commercial relationship between Dell and VMware post-separation.
  • 7The agreement includes termination clauses if the transactions are not completed by January 28, 2022, or if certain other conditions are not met.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce Dell Technologies Inc.'s entry into a Separation and Distribution Agreement with VMware, Inc. This agreement outlines the terms and conditions for separating VMware's business from Dell's remaining operations, ultimately leading to two independent publicly traded companies.

Dell shareholders will ultimately own shares in two separate public companies. Following the separation, they will hold shares in the newly independent VMware and in the remaining Dell Technologies entity. The process involves VMware paying a significant cash dividend to Dell, which is intended to be distributed to Dell's shareholders as part of the overall transaction.

The transaction is subject to several critical conditions. These include receiving favorable opinions and a private letter ruling from the IRS regarding the tax treatment of the transactions, obtaining necessary regulatory approvals, the absence of legal restraints, and VMware maintaining an investment-grade credit rating. Both parties must also meet certain financial and operational representations and warranties.

The VMware Special Dividend, expected to be between $11.5 billion and $12 billion, is a crucial part of the separation. This cash distribution from VMware to Dell, prior to the spin-off, is intended to provide value directly to Dell's shareholders as part of the separation process.