Dell Reportedly to Sell Software Assets to Ease Debt From EMC Deal

According to Reuters, Dell may sell such businesses as Quest, SonicWall and AppAssure to raise $10 billion as it prepares to buy EMC for $67 billion.

Dell CEO

Dell reportedly will sell off about $10 billion in assets—including possibly some of the software businesses it has acquired over the past several years—as it prepares to bring EMC into the fold.

Unnamed sources told Reuters that Dell will take on about $49.5 billion after it completes the $67 billion acquisition of EMC and its federated companies sometime next year. Selling such assets as its Quest software business (for systems management), SonicWall (network security) and AppAssure (data backup) will help the company reduce the debt load, according to the sources.

The report regarding the selling of assets is the latest in a string of speculation about what Dell and EMC may do in the months leading up to the closing of the deal in hopes of making the financing and integration efforts work more smoothly.

Re/code, also citing unnamed sources, reported Nov. 1 that EMC officials were considering moving up plans to sell about 20 percent of its cloud computing business Pivotal in an IPO early next year in the wake of Dell's bid to buy EMC and its companies. According to the report, Dell executives have given their approval to the plan.

EMC CEO Joe Tucci in the past has talked about taking at least part of Pivotal private—similar to VMware, of which EMC owns almost 80 percent—though had not set a timetable for the move. The Dell acquisition apparently is accelerating plans, given that it could bring in billions of dollars that could be used to reduce some of the debt. Michael Dell has said that he plans to pay down as much of the debt as possible in the first 18 to 24 months after the deal closes.

Michael Dell and Tucci in early October announced the proposed acquisition, which would be the largest in the history of the tech industry. It's part of Michael Dell's plan to make his namesake company among the largest providers of enterprise IT solutions and services, enabling it to compete with such stalwarts as IBM and Hewlett Packard Enterprise (HPE). According to Reuters, the asset sale at Dell would not include such hardware products as servers, which are considered key to competing with HPE, IBM and Cisco Systems.

During the Dell World 2015 user conference a week after the deal was announced, the CEO and other company executives said buying EMC would give Dell greater capabilities in such areas as data storage, cloud computing and virtualization, as well as greater access to enterprises to complement Dell's strength in small and midsize companies.

The controversial proposal has drawn its share of detractors and supporters, including Oracle Chairman and CTO Larry Ellison, who in speaking with financial analysts last week called the deal "brilliant" and "fabulous" and said Dell and Silver Lake Partners—Michael Dell's financial backers when the two bought out Dell for $25 billion two years ago and took it private—"are going to make billions of dollars."

Not surprisingly, rivals—such as HPE CEO Meg Whitman—said the acquisition will be good for them, given that Dell executives for at least two years will be distracted by the challenge of integrating such a larger company as EMC into their own.

Both Dell and HP over the past several years have been making moves to reduce their reliance on a shrinking global PC market and expand their capabilities in a rapidly changing IT solutions space that is being impacted by such trends as cloud computing, big data and mobility, and both have made starkly contrasting decisions. While Dell is looking to bulk up with the EMC acquisition, HP has split in two, with HPE focusing on enterprise technologies like servers, networking and the cloud, and HP Inc. selling PCs and printers.