Dell Technologies today said it will spin off its 81% stake in VMware. The deal will create two separate companies but preserve Dell and VMware’s “strategic partnership,” VMware CFO and interim CEO Zane Rowe said in a statement.

Under the terms of the agreement, VMware will pay a cash dividend between $11.5 billion and $12 billion to all VMware shareholders ranging from $27.43 to $28.62 per share, based on outstanding shares as of March 16. Dell Technologies will also receive a dividend of between $9.3 billion and $9.7 billion that the company will use to pay down its debt.

Dell Technologies’ stockholders will receive a pro-rata distribution of VMware shares held by Dell Technologies, and Michael Dell and Silver Lake Partners will own direct interests in VMware.

The two companies also finalized a commercial agreement that they say “preserves and enhances their strategic partnership to deliver joint customer value.”

The spinoff from Dell will give VMware the freedom to execute on its vision to create a unified management layer via software across all clouds and hardware infrastructure, Rowe said in a statement. Additionally, it will simplify the company’s capital structure and governance model.

“We will have an enhanced ability to extend our ecosystem across all cloud vendors and on-premises infrastructure vendors and a capital structure that will support growth opportunities,” Rowe said. “Our strategic partnership with Dell Technologies remains a differentiator for us, and, as we execute on our multi-cloud strategy, we continue to provide customers our solutions and services on any public cloud and any infrastructure.”

While the spinoff decision isn’t a surprise, it did happen earlier than anticipated. Last July, the parent company admitted it was exploring a VMware spinoff — its second such what-to-do-with-VMware discussion in two years. Later in the year, however, Dell said it wouldn’t make any final decisions about VMware until September 2021.

The deal also comes as VMware searches for a CEO to replace Pat Gelsinger, who left the virtualization giant in January to return to Intel as its CEO.

Futurum Research principal analyst Daniel Newman said the spinoff will benefit both companies. “Of course, VMware was an important component to Dell’s growing cloud narrative, so some may see this as a negative move, but I don’t see it slowing Dell’s progress in transitioning to more robust cloud offerings,” he said. “If anything this will open the door to further expansion in this area.”