VMware, Inc. (VMW) announced it has entered into a stock purchase agreement with Dell Technologies, Inc., under which the company agreed to purchase $500 million worth of VMware Class A Common Stock currently held by Dell's subsidiary, EMC Corp. The company said the impact of the agreement on VMware's fourth-quarter fiscal 2016 and full year 2016 share count and non-GAAP earnings per share is not expected to be material.
Dell Technologies plans to use the $500 million proceeds to repurchase the Dell tracking stock for VMware. Dell (DVMT) announced its board has approved a new stock repurchase program under which the company is authorized to repurchase up to $500 million of shares of the company's Class V common stock over a period of six months, using assets of the company's Class V Group. Dell said these transactions are intended to reduce the outstanding shares of the Class V common stock, lower expenditures for VMware's Class A common stock repurchase program and provide Dell Technologies with balance sheet efficiencies.
The Dell board also approved the suspension of the previously reported DHI Group repurchase program, under which the company was authorized to repurchase up to $1 billion of shares of the company's Class V common stock over a period of two years, using assets of the company's DHI Group. Before its suspension, the company had repurchased approximately $324 million of Class V common stock under the DHI Group program.
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