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  • Business
    Bloomberg

    Dell Will Spin Off VMware, Unwind Part of Biggest Tech Deal

    (Bloomberg) -- Dell Technologies Inc. said it will spin off its stake in VMware Inc., creating two publicly traded companies and raising cash to pay down debt. Its shares jumped on the announcement.The spinoff will unwind, at least in part, a consolidation created five years ago in Dell’s $67 billion acquisition of VMware’s parent, EMC Corp. The spending spree helped Dell branch out from its origins as a personal computer maker, but left the company saddled with debt.VMware will distribute a special cash dividend of $11.5 billion to $12 billion to shareholders at the close of the deal, which is expected by the fourth quarter, Round Rock, Texas-based Dell said Wednesday in a statement. Dell, which owns 81% of VMware, will receive a payout of as much as $9.7 billion.“We expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders,” said Michael Dell, chairman and chief executive officer of his eponymous company. “Both companies will remain important partners.”The spinoff will provide Dell cash to live up to promises to investors to reduce its debt load, which was $48.5 billion at the end of its most recent quarter. The company said “core debt” was $29.2 billion when it reported earnings Feb. 25.VMware was founded in 1998 and acquired by EMC in 2004, which sold part of its stake in an initial public offering three years later. EMC’s holdings in the maker of data center software passed to Dell when it acquired EMC in 2016 in the largest successful acquisition in the technology industry. In another effort to slim down the company, Dell is also exploring options including a potential sale of cloud business Boomi, people familiar with the matter told Bloomberg.Michael Dell and other executives faced questions from analysts about their decision to reverse the industry consolidation strategy relatively quickly. The executives emphasized the benefit to investors of the split and said the stock market hasn’t given the combined company the appropriate value.“We think this is a move in the right direction for Dell and it helps unlock the sizable conglomerate discount that is currently embedded,” said Amit Daryanani, an analyst at Evercore ISI.Dell has a five-year commercial agreement with VMware to continue to market and sell the software maker’s products. Currently about 35% of VMware’s revenue comes through Dell’s sales force.“The commercial agreement allows us to achieve the same things we had targeted with the acquisition of EMC,” Dell Chief Operating Officer Jeff Clarke said in an interview.The formal separation from VMware will give Dell more than $9 billion to add to the $5 billion of debt it was planning to pay down this year. VMware will also take $4.8 billion of debt off Dell’s books when the transaction is completed. Dell is on the path to an investment grade from debt ratings services, Clarke said.The estimated value of the cash dividend that VMware will provide to stockholders ranges from $27.43 to $28.62 per share, based on outstanding shares as of March 16, the Palo Alto, California-based company said in a statement.Dell shares rose about 8% in extended trading after closing at $92.70 in New York. The stock has gained 26% this year.The spinoff is “subject to certain conditions, including receipt of a favorable IRS private letter ruling and an opinion that the transaction will generally qualify as a tax-free spinoff to Dell Technologies shareholders for U.S. federal tax purposes,” Dell said in its statement.Dell first said last July that it was considering a spinoff of its VMware stake, although the transaction wouldn’t occur until after September 2021 for tax purposes.(Updates with executive comments beginning in the seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • The Latest: California governor says all schools must reopen
    Health
    The Canadian Press

    The Latest: California governor says all schools must reopen

    SAN FRANCISCO — California Gov. Gavin Newsom is urging all schools in the state to reopen, saying there are no health barriers to getting children back into classrooms and ending distance learning. Speaking Wednesday, he said: “Money is not an object now. It’s an excuse.” His wishes remain an expectation rather than a mandate because California’s decentralized education system lets the 1,200 school districts govern themselves. Some of the largest school districts are reopening, including Los Angeles and San Diego. Newsom says more than 9,000 of California’s 11,000 schools have reopened or have set plans to reopen, but that is misleading because there is no uniformity in what it means for a school to be open. Some are offering one or two days of in-person instruction, mixed with distance learning on other days. ___ THE VIRUS OUTBREAK: — US weighs next steps for J&J virus shot amid clot mystery — EU plans Pfizer vaccine contract extension to 2023 — South Africans concerned about pause in use of J&J vaccines — Postponed Tokyo Olympics is scheduled to open in 100 days — Follow AP’s pandemic coverage at https://apnews.com/hub/coronavirus-pandemic and https://apnews.com/hub/coronavirus-vaccine ___ HERE’S WHAT ELSE IS HAPPENING: HONOLULU — State lawmakers in Hawaii are moving to delay pay raises scheduled for themselves, the governor and judges because of the economic damage from the coronavirus pandemic. Pay raises of 10% were scheduled to take effect for state legislators July 1 as recommended by the state Salary Commission. Instead, a bill that the House initially approved Tuesday will defer the raises until January 2023. Gov. David Ige says he supports suspending the pay raises. Ige says he already told his Cabinet that he wouldn’t accept his raise. ___ ALBUQUERQUE, N.M. -- The public school system in Albuquerque, N.M., is ramping up its efforts to get vaccines to students. Operations chief Gabriella Duran Blakey says 50 students were included in a vaccine clinic Wednesday as part of a partnership between the school district and city health workers. Next week, the school district says it will use the reach of its mailing lists and social media to encourage students to register for the vaccines being offered in New Mexico. As soon as next Wednesday, students could be eligible for vaccine clinics aimed specifically at them. Parents are required to attend in order to sign release forms. ___ WASHINGTON — Ivanka Trump has received her first COVID-19 shot and is encouraging others to get vaccinated as quickly as they can. Two people familiar with Ivanka Trump’s plans say she was eligible to get vaccinated along with other White House staff when she worked as a senior adviser, but that she chose to wait. The individuals were not authorized to comment publicly and spoke on condition of anonymity. Ivanka Trump told The Associated Press in a written statement that “getting vaccinated is our best way to beat this virus and protect ourselves and others.” She received the Pfizer vaccine in Florida, where individuals age 16 and older are eligible to be vaccinated. The 39-year-old daughter of former President Donald Trump and her family relocated to the Miami area after her father left office in January. ___ ANKARA, Turkey — Turkey posted another record of 62,797 confirmed coronavirus cases on Wednesday. The ministry also reported 279 deaths in the past 24 hours, the highest since the start of Turkey’s outbreak. President Recep Tayyip Erdogan on Tuesday announced a partial lockdown during the first two weeks of the Muslim month of Ramadan in a bid to curb the infection rate. He also warned of more measures to come if the number of cases fail to decrease. The measures include bans on intercity travel, a return to online education, closing sports and leisure centres and expanding the length of night-time curfews. The health ministry says Turkey is going through its “third peak” in infections and about 85% of the cases in the country can be traced to the variant first detected in Britain. Turkey has registered more than 4 million cases, seventh highest in the world. Confirmed deaths stand at more than 34,000. ___ MISSION, Kan. — Kansas health officials say the coronavirus variant from Brazil has been detected for the first time in the state. The Kansas Department of Health and Environment’s announcement the P.1 variant has been detected in Sedgwick County. The agency says it is investigating how the person became infected and whether others may have been exposed. The state now has all three of the most widely spread variants. Adrienne Byrne, Sedgwick County Health Director reiterated the importance of getting tested for the coronavirus. This month, the South African variant was identified for the first time in Kansas in someone from Finney County. Another variant first identified in Britain was found in several Kansas counties. Lee Norman, secretary of health and environment, urged Kansans in a statement to wear masks, physically distance and get vaccinated. About 35% of the state’s 2.9 million residents had received at least one shot by Wednesday. ___ DENVER — Colorado health officials say nearly 4,000 people who received COVID-19 vaccinations at a medical spa need to be re-vaccinated because they can’t verify the doses were properly stored. The department announced Tuesday it had stopped vaccinations at Dr. Moma Health and Wellness Clinic in Colorado Springs on Friday after county health officials observed problems in vaccine storage. The department says the shots given at the clinic are considered invalid and those who got one shot of the Pfizer or Moderna vaccine there need to start the two-shot vaccination process over again. It says those who got two shots should get one more. ___ NEW YORK — U.S. health officials are weighing next steps as they investigate a handful of unusual blood clots in women who received Johnson & Johnson’s COVID-19 vaccine. The reports are exceedingly rare — so far, six cases out of more than 7 million inoculations. And it’s not clear if they are linked to the J&J vaccine. European regulators have declared such blood clots a rare but possible risk with the similarly made AstraZeneca vaccine. The Centers for Disease Control and Prevention in the U.S. will debate in a public meeting Wednesday how to handle the J&J vaccine while authorities investigate. “Right now, we believe these events to be extremely rare, but we are also not yet certain we have heard about all possible cases as this syndrome may not be easily recognized,” says CDC Director Rochelle Walensky before the meeting. ___ JOHANNESBURG — South Africa’s decision to suspend the use of the Johnson & Johnson vaccine due to preliminary reports of rare blood clots has left the country without any shots. That comes as it struggles to combat an aggressive coronavirus variant. South Africa’s more than 1.5 million confirmed coronavirus cases represent more than 30% of all the confirmed cases in Africa. It has only inoculated 290,00 health care workers so far, all with the Johnson & Johnson vaccine. South Africa’s plans to begin large-scale vaccinations next month are dependent upon deliveries of the Johnson & Johnson and the Pfizer vaccines. Some health experts criticized South Africa’s move to pause the Johnson & Johnson product at such a critical juncture. ___ REIMS, France — French President Emmanuel Macron has announced free psychological counselling will be provided to children and teenagers having mental health difficulties because of the coronavirus pandemic. Those ages 3 to 17 will be entitled to 10 free sessions with a psychologist, with a doctor’s prescription. Macron announced the additional help after meeting doctors and families at a pediatric psychiatric unit. His office says the plan will run for the duration of the pandemic. Doctors have reported surges of psychiatric emergencies involving young people, including attempted suicides, panic attacks and other symptoms of mental anguish. ___ MILAN — Italy is set to receive an additional 7 million doses of the Pfizer vaccine by the end of June. “Finally, a bit of good news,” the commissioner for Italy’s COVID emergency, Franceso Paolo Figliuolo, says Wednesday from the tiny northern region of Aosta. He says the additions were the result of an increase in arrivals to Europe of 50 million Pfizer doses. It is the third boost in doses of the Pfizer vaccine ordered by Italy, which already was set to receive some 25 million doses by the end of June. Italy has put on hold the Johnson & Johnson vaccine, following the warning from the U.S. Food and Drug Administration. First J&J deliveries arrived on Tuesday and were set to reach 7.3 million by the end of the quarter. ___ LONDON — European countries are diverging on whether to push ahead with giving residents Johnson & Johnson’s COVID-19 vaccine after reports of rare blood clots in a handful of recipients in the United States. Some leaders opted for caution Wednesday after U.S. officials paused the vaccine’s use while they study the clots in a handful of people. Italy, the Netherlands, Croatia and Denmark put their Johnson & Johnson lots in storage while waiting for guidance from European health officials. But Poland and France said they would administer the doses they received. Experts agree COVID-19 poses a much larger risk of hospitalization and death than the potential threat of atypical clots. The AstraZeneca vaccine is in wide use around the globe, though not yet in the U.S. Several countries have imposed age restrictions on its use because of blood clot concerns. Denmark, which put the vaccine on hold last month, decided Wednesday not to resume using the shots it had on hand. It will offer a second dose of a different vaccine if citizens had received a first dose of AstraZeneca. ___ SAN JUAN, Puerto Rico — The government of Trinidad and Tobago says it is closing all beaches in the twin-island nation for three weeks to stem a rise in coronavirus cases. Officials also say they’re banning indoor dining at restaurants, bars and casinos. Only groups of five, instead of 10, will be allowed to gather in public. The measures take effect at midnight Thursday. Trinidad and Tobago had previously cancelled one of the biggest carnival celebrations in the Caribbean for this year. The nation of 1.2 million people has reported more than 8,500 cases and more than 140 confirmed deaths. Among those who have tested positive for coronavirus is Prime Minister Keith Rowley. More than 10,000 people have been vaccinated so far. ___ LONDON — The European Medicines Agency is assessing the rare blood clots reported in the U.S. after receiving the Johnson & Johnson COVID-19 vaccine, and a recommendation for European countries is expected soon. “EMA is expediting this evaluation and currently expects to issue a recommendation next week,” the EMA says. The agency authorized the J&J shot for use across the 27-bloc EU last month, although no countries had started widespread vaccination campaigns with it. “EMA remains of the view that the benefits of the vaccine in preventing COVID-19 outweigh the risks of side effects.” The EU drug regulator says it was investigating the six cases reported among nearly 7 million people vaccinated with the single-dose J&J shot. The EMA says it was in contact with officials at the U.S. Food and Drug Administration and the Centers for Disease Control and Prevention about their ongoing probe. The rare blood clots, in combination with a low level of blood platelets, caused American officials to pause the vaccine while they investigate. ___ MADISON, Wis. — The Wisconsin Supreme Court says Gov. Tony Evers’ administration doesn’t have the authority to issue capacity limits on bars, restaurants and other businesses without approval of the Legislature. The ruling comes two weeks after the conservative-controlled court struck down the state’s mask mandate. The Supreme Court also ruled last year in a similar case, saying the Democratic governor needed legislative approval for an emergency declaration that shut down businesses early in the coronavirus pandemic. There hasn’t been a statewide capacity limit restriction in place since October. The Supreme Court ruled 4-3 on Wednesday the order issued by Evers’ Department of Health Services meets the definition of a rule, which by law must go through the Republican-controlled Legislature. The court’s four conservative justices ruled against Evers, while three liberals dissented. The Associated Press

  • Harvard Pedigrees Opened the Door to World’s Biggest SPAC Deal
    Business
    Bloomberg

    Harvard Pedigrees Opened the Door to World’s Biggest SPAC Deal

    (Bloomberg) -- A few years after launching Grab Holdings Inc. in 2012, Anthony Tan got a piece of advice from Jack Ma. The co-founder of Alibaba Group Holding Ltd. told the entrepreneur that life is a tsunami. When you’re up on the wave, get ready for the crash, he said.In 2020, that all came to pass. The coronavirus sent cities across Southeast Asia into lockdown. Demand for ride-hailing, a key business, plunged. Then around December, its big plan to merge with arch rival Gojek collapsed.Tan wasn’t ready to give up on going public. Early this year, a connection introduced him to the Silicon Valley investor Brad Gerstner, the founder of Altimeter Capital Management. The two men, though from opposite sides of the world, had a lot in common. Both were Harvard Business School alumni, and both had eschewed easier paths in life to set up their own firms.Within about three months, the pair had announced the world’s biggest SPAC deal, which will see Grab list in the U.S. at a valuation of almost $40 billion.“A year ago, the world looked like it was going to end,” Tan, 39, said. “As an entrepreneur, you go through these crazy lows and crazy highs.”In an interview over Zoom, Tan recalls that after the initial introduction was made, Gerstner called some common friends to check him out. They included Rich Barton, the entrepreneur who leads Zillow Group Inc., and Uber Technologies Inc. Chief Executive Officer Dara Khosrowshahi, a Grab board member. Tan passed the test.Read more: Singapore’s Grab to List in U.S. in $40 Billion SPAC DealThe Grab-Altimeter special purpose acquisition company merger underscores the importance that’s placed on connections at the top of the technology world, and how graduating from universities like Harvard still helps to open doors.Gerstner has also invested in Coupang Inc., the Korean e-commerce giant founded by Bom Kim, who attended Harvard Business School around the same time as Tan before Kim dropped out. Grab rival Gojek was founded by Nadiem Makarim, a Harvard Business School classmate of Tan who’s now Indonesia’s education minister.So many billions were “created out of that class,” Gerstner, 49, said.Their three companies already have a combined valuation of about $130 billion, including almost $80 billion for Coupang after its initial public offering in March.“The world is shrinking,” Gerstner said. “Some of the most exciting leadership today is in regions like Southeast Asia.”Tan, born into a wealthy business family in Malaysia, got the inspiration to start Grab during his time at Harvard Business School from 2009 to 2011. He quit the family business, Tan Chong Motor Holdings Bhd. and started a taxi-hailing service known as MyTeksi with his Harvard classmate Tan Hooi Ling. Later Grab would expand into businesses including food delivery and online payments as it became a so-called super-app in Southeast Asia.Gerstner was in Harvard about a decade earlier, from 1999 to 2000. The American investor grew up in a small town in Indiana, admiring Warren Buffett. He started his career as a securities lawyer handling IPOs. After getting his MBA from Harvard, he joined the venture capital firm General Catalyst and later founded and sold three companies.In the depths of the global financial crisis in 2008, he set out on his own, establishing Altimeter Capital with just $3 million raised from friends and family. Today the firm, which invests in public and private technology companies, manages $15 billion. He’s backed tech players including Expedia Group Inc., Uber and software firm Snowflake Inc.Tan, a fixture at the World Economic Forum, has always stressed the importance of business partnerships. He spends much of his time networking, according to people who know him. On the eve of the merger announcement, Tan said he was out having dinner with a merchant partner.When in Indonesia, Tan abandons his signature black t-shirt and puts on a traditional batik shirt. He addresses conference guests in Indonesian. When visiting Tokyo to attend a SoftBank Group Corp. conference in 2019, he bowed deeply after SoftBank founder Masayoshi Son, his most early ardent supporter, introduced him as “a new superstar in the AI era.”SoftBank invested about $3 billion in Grab, but relations with Son cooled after the Japanese company put pressure on Grab to combine with Gojek, according to people familiar with the matter.Tan said his relationship with Son is still close. During the Zoom interview, he took out his phone and read aloud a text that he said he received from Son about the merger. “Anthony, thank you so much for the update. I’m really happy to hear that the IPO is going well,” Tan read.Gerstner, meanwhile, says he’s impressed by how Grab persevered through the pandemic -- and by its decision, like his own, to plough its own furrow.Grab “ultimately chose an independent path,” he said. “It’s simply one of the biggest internet companies doing one of the biggest IPOs of the year.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.