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Francisco Partners and the private equity division of Elliott Management Corp have consented to acquire Dell Inc's software division for more than $2 billion. A press release issued by Francisco Partners and Dell confirmed the latest development, TechCrunch reported.
By divesting the company's software division Dell will be able to focus on its technology portfolio and boost its balance sheet. In October, the company agreed to acquire data storage company EMC Corp, which has controlling stakes in cloud-based virtualization software company VMware Inc, for $67 billion.
Incidentally, rumors related to the acquisition of Dell's software division first appeared last week. The deal includes Quest Software and SonicWALL. Possibilities of other pieces being included in the deal cannot be ruled out. However, Dell will most probably retaining Boomi, a smaller asset dedicated to cloud-based software integration, Reuters said.
According to people familiar with the development, Dell and the consortium of Francisco Partners and Elliott may sign an agreement as early as this week. However, they cautioned that the negotiations could still end unsuccessfully.
In fact, Dell is trying to sell almost its entire software assets, counting Quest Software and SonicWall. A statement issued by Francisco CEO Dipanjan Deb said that Quest Software and SonicWALL provide mission-critical software to over 180,000 customers. He added that they see significant opportunity to build upon the company's impressive technology and product portfolio.
Dell paid $2.4 billion to acquire Quest, which provides IT services, in 2012. On the other hand, Dell purchased SonicWALL, a security company, for an undisclosed sum around the same time. However, a report in The Wall Street Journal claimed that Dell paid $1.2 billion for SonicWALL.
Considering that the TechCrunch report is correct, Dell will be receiving only $2 billion after paying $3.6 billion for these two properties just four years ago.
The deal comes in the wake of an increasing activity by private equity firms. Earlier this month, Vista Equity Partners acquired Marketo for $1.8 billion and subsequently picked up Ping Identity for $600 million. In addition, private equity firm Thoma Bravo acquired Qlik for $3 billion, while Providence Strategic Growth spent $130 million to purchase Logic Monitor last week.
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