VMW will pay a special cash dividend of between $11.5 billion to $12 billion to VMW’s shareholders, which will include around $9.5 billion for DELL.
Our view is that the market has consistently undervalued DELL’s core business in favor of attributing more value to the company’s 80.6% stake in VMW. We believe the upcoming stake distribution allows DELL to unlock immediate value by lowering the conglomerate discount and giving a quick upside opportunity for shareholders.