Shedding EMC’s content management unit would help the companies soften the financial blow of Dell’s $67 billion bid to buy the storage vendor.
Dell, which already is selling its services business for $3 billion and still has its Quest and SonicWall units up for sale, reportedly is now looking to put EMC’s content management division up for bid in its efforts to reduce the amount of debt it will take on when it closes its $67 billion acquisition of the data storage vendor this year.
According to unnamed sources who spoke with Bloomberg, Dell and EMC officials are in talks to sell Documentum, a company that EMC bought in 2003 for about $1.7 billion. There was no indication regarding who would by the business unit, though one person said it probably would be a private equity firm.
Spokesmen for both Dell and EMC declined to comment on the report.
CEO Michael Dell, who in 2013 took his company private in a $25 billion buyout, announced in October 2015 that the tech vendor was buying EMC to accelerate its transformation into a complete enterprise IT solutions and services provider. The deal will not only include EMC, the world’s largest storage technology vendor, but also the various companies that make up EMC’s federation of businesses, such as VMware, VCE, Pivotal, RSA and VirtuStream.
The acquisition, which officials expect to close by October, will give Dell a significant boost in a broad range of areas, including storage, virtualization, security and the cloud.
At the same time, Dell reportedly will take on as much as $50 billion in debt, and company officials are looking to sell assets to lessen the amount. NTT Data, the services arm of NTT Group of Japan, announced in March that it is buying Dell’s services group for about $3.05 billion in an effort to gain more traction in the United States and other markets, bolster is capabilities in infrastructures and become a larger competitor in the global IT services market.
The bulk of Dell’s services business came from the company’s $3.9 billion acquisition in Perot Systems in 2009.
Over the past several months, Dell reportedly also has been looking to its Quest software business and SonicWall network security unit. According to the Bloomberg report, Dell is pushing forward with the effort and would like to sell the two businesses together for about $4 billion. The sources said private equity firms and other companies have shown interest in buying Quest and SonicWall.
Dell is the world’s third largest PC vendor, and the bulk of its revenue—about 65 percent—still comes from the client business. However, the global PC market has been contracting since early 2012 as the popularity of smartphones and tablets grew, and system and component makers have been broadening their portfolios to reduce their reliance on the PC market.
Dell over the past several years has spent billions of dollars to buy companies to give it greater capabilities in such areas as storage, networking, security, software and the cloud.
It’s been hard for industry observers to get a gauge on Dell’s finances since the company went private and no longer has to report quarterly earnings. However, in a lengthy document filed by EMC with the Securities and Exchange Commission in March, Dell officials disclosed that in the two years since going private, the company has seen declining revenues and losses, including a 6 percent drop in net revenue in the most recent fiscal year caused in large part by lower sales in the PC, services and software businesses.