Dell considers options among initial public offering, acquisition
The company board is meeting later this month and will discuss strategic plans
Dell Technologies is considering strategic options including a public stock offering, according to people familiar with the matter, as the corporate-technology company seeks ways to boost revenue and raise funds.
The board is meeting later this month and will discuss its options, said the people, who asked not to be identified because the talks are private. Round Rock, Texas-based Dell may also decide not to make any such moves at this time, the people said.
Founder and chief executive officer Michael Dell took his company private in 2013, when he teamed up with Silver Lake Management on a leveraged buyout. That freed Dell to cut costs and work to become a bigger supplier of hardware and software for corporate data centers without the quarterly investor scrutiny that comes with being a public company. Three years later, Dell acquired storage-technology provider EMC Corporation and its majority stake in data-center software vendor VMware, taking on a massive debt load to seal the $67 billion deal.
Raising cash could help the company further expand or pay off some of the debt. Dell Technologies has about $46bn of debt, according to data compiled by Bloomberg. That includes about $3bn of bonds maturing in 2018 and $4.35bn due next year while the company also has loans outstanding, the data shows.
Another option is to buy the rest of VMware that Dell does not already own, said one person familiar with the discussions. VMware shares have risen more than 60 per cent in the past year.
Dell is also considering a public share sale for its Pivotal Software cloud-computing venture. Dell met with bankers last year to discuss that possibility and was told the company could fetch a valuation of $5bn to $7bn, said one of the people. Still, any Pivotal offering may wait until the company has converted more of its business into wider-margin software and subscriptions and away from less-profitable services businesses, the person said.
Pivotal, a cloud software and services firm, was once a joint venture of VMware, EMC and General Electric and became part of Dell after the EMC acquisition.
Dell and VMware couldn’t immediately be reached for comment.
Updated: January 26, 2018 12:10 PM