(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.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.”Dell is unwinding part of an acquisition spree that spree that branched out from its origins as a personal computer maker but left the company saddled with debt. The spinoff will provide Dell cash to live up to promises to investors to reduce that load, which was $48.5 billion at the end of its most recent quarter. Dell 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 for $67 billion in 2016 in the largest successful acquisition in the technology industry.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, 2021, 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 spin-off to Dell Technologies shareholders for U.S. federal tax purposes,” Dell said in its statement.Dell said last July that it was exploring a spinoff of its VMware stake, although the transaction wouldn’t occur until after September 2021 for tax purposes.(Updates with value of cash dividend in the sixth 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.