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(Reuters) — Dell Technologies said on Wednesday it would spin off its 81% stake in cloud computing software maker VMware to create two standalone public companies in a move that will help the PC maker reduce its pile of debt.

VMware is currently Dell’s best-performing unit, as it has benefited from companies looking to cut costs and move to the cloud, a shift that has been accelerated by the COVID-19 pandemic.

Shares of Dell rose more than 8% in extended trading.

VMware will distribute a special cash dividend of between $11.5 billion and $12 billion to all of its shareholders, including Dell, which will receive between $9.3 billion and $9.7 billion.

For Dell, the special dividend will help reduce its long-term debt of $41.62 billion, much of which was taken on during its $67 billion acquisition of VMWare’s then-majority owner EMC in 2016.

The companies said the deal will simplify their capital structures. Both companies will also enter into a commercial arrangement to continue to align sales activities and for the co-development of solutions.

VMware, whose software helps companies squeeze more work out of datacenter servers, has been looking for a CEO after previous boss Pat Gelsinger was tapped to lead Intel.

Dell first announced the spinoff plans in July last year. The deal is expected to close in the fourth quarter.


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