Dell is reportedly considering a sale to VMware and it’s believed that if such a deal takes place, it may turn out to be the biggest deal ever in the tech industry. You may be a bit confused to hear that Dell is thinking about selling itself to a company it already owns. Dell currently owns 80 percent of VMware but it can sell itself to VMware in a process that’s known as a reverse merger.
Some of you might remember that Dell used to be a public company before the founder and CEO Michael Dell took the company private for $24.4 billion in 2013 by teaming up with private equity firm Silver Lake.
Dell may become a public company once again through a reverse merger with VMware, a company worth $55 billion that Dell already owns and controls. Citing people familiar with the matter, CNBC reports that this reverse merger will see VM buying the larger company – Dell in this case – thus allowing Dell to be traded publicly without having to go through a formal listing process.
If a reverse merger happens it would see VMware issue shares to Michael Dell and Silver Lake, the current owners of Dell. The owners will then be able to sell their shares on the public market and monetize their investment in the company.
The report predicts that it’s likely going to be the biggest deal in tech industry history and it will provide a way to investors who backed its bid to go private in 2013 a way to monetize their deal. The reverse merger may also help Dell pay off some of its debt that hovering close to $50 billion.
Dell has reportedly not settled on an option right now and is said to be considering other paths so a more conventional initial public offering can’t be ruled out at this point in time. There’s also the possibility that Dell might acquire the remaining 20 percent stake of VMware that it doesn’t own currently. The report does mention that Dell is unlikely to sell the company outright or even part with its stake in VMware.