Dell is buying out shares that track the performance of its subsidiary VMware, a software service. VMware shareholders will choose between receiving cash or stock in the transaction.
VMware is surging Monday morning, trading up 9.56%, after its parent company, Dell Technologies, said it will buy out the shares that track its performance as part of a broader effort to simplify its ownership structure.
Dell is offering VMware shareholders 1.3665 class C common Dell shares in exchange for each VMware share. Alternatively, VMware shareholders could opt for $109 in cash. After VMware shareholders choose whether they want cash or Dell stock, they'll own between 20.8% and 31% of Dell.
Dell investors are applauding the deal, with the stock up 11.41% to $94.23 a share.
"Unprecedented data growth is fueling the digital era of IT, and we are uniquely positioned with our portfolio of technologies and services to enable the digital, IT, security and workforce transformations of our customers," CEO Michael Dell said.