According to inside sources, Dell is ready to sell to VMWare, a company that they own 80% of. Dell has been struggling to keep up with the industry lately and a reversed-merge with VMWare could help them get back on their feet. But is the deal a good choice and are investors happy?
In 2015, Dell acquired EMC for $67 million which is still considered the largest tech-deal in history. At the time, VMWare was the major driving force being the deal, and today the previously little known clouding company could buy Dell and in some ways repay the favor. The deal would also mean that Dell would become publicly traded again after it was made private in 2013. Before 2013, Dell stocks were available since 1988.
During the last few years, Dell has struggled to keep up and currently has over $50 billion in debt. A sale by VMWare could help ease Dell’s burden especially since VMWare has experienced several record-breaking years, breaking over $1.2 billion in revenue during 2016 – a number they are said to have topped in 2017.
The Biggest Tech Deal in History But Is It Good for Investors?
When Dell acquired VMWare back in 2015 it was the biggest deal in the tech industry ever and still is today. Since the original deal gave Dell 80% of VMWare it would mean that a reversed-merge where VMWare stands as the buyer could have the potential of topping the last deal while setting another record breaking price with the same two companies. However, Dell is a not publicly traded company and an official market value is currently not available.
The deal has yet to be officially announced and spokespeople from both companies have declined to comment on the matter. In fact, so far the news is just based on rumors from people with “inside information,” which means it might not happen.
Despite the fact that nothing has been confirmed, the deal is not affecting either company very well. When the news about a potential deal broke, the VMWare stock instantly fell and at the time of writing has decreased by over 16%, showing that shareholders are not excited about it.