Dell may sell itself in an unusual and massive deal that would let it go public again

  • Dell is exploring a reverse merger with VMware, which could become the largest tech deal ever, according to CNBC.
  • Dell owns 80% of VMware but would sell itself to VMware under such a deal.
  • The deal would allow Dell to become a publicly traded company, four years after it went private.

Dell is weighing a sale of its business to VMware, a massive and unusual deal that would allow Dell to go public by essentially selling itself to a company that it owns, according to CNBC’s Alex Sherman.

Shares of VMware were down 9% on the report, which cited anonymous sources and noted that Dell was also considering other strategic options.

Dell owns 80% of VMware, a publicly traded software virtualization company that Dell acquired when it purchased EMC for $67 billion in 2015.

CNBC did not cite a specific price that VMware may pay for Dell in a reverse merger, but it noted that the value should theoretically be above the $67 billion EMC transaction, which stands as the largest tech deal ever.

Reuters reported last week that Dell was exploring several options that could see it go public or strike an acquisition.

Full circle for Dell

A deal with VMware would mark a full circle for Dell, which teamed up with the private-equity firm Silver Lake in 2013 to exit the public market and go private amid a sharp decline in its traditional PC business and a punishing experience on Wall Street. Since then, Dell has transformed its business, reducing its focus on selling personal computers and turning itself into a provider of back-end software and services for data centers and corporations.

Michael Dell, who founded Dell as a college student by selling PCs out of his car, has said the decision to go private has been “fantastic” and allowed the company to avoid the “90-day shot clock” of constantly worrying about pleasing Wall Street with earnings results.

Still, after four years of revamping the business, Silver Lake may be looking to monetize the investment it made in Dell to take it private. Dell and Silver Lake would receive shares of VMware under the deal being explored, which they could then sell on the public market, CNBC reported.

A Dell representative declined to comment to Business Insider’s query on the report. VMware did not immediately return a request for comment. Read the full CNBC story here.