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Dell Software Deal with Francisco Partner and Elliott in Advanced Stae: Reuters

Dell Software Deal with Francisco Partner and Elliott in Advanced Stae: Reuters
Talks for acquisition of Dell Inc's software division for more than $2 billion by buyout firm Francisco Partners and the private equity arm of activist hedge fund Elliott Management Corp are in the advanced stage, reported Reuters quoting three people familiar with the matter.
After Dell agreed in October to buy data storage company EMC Corp for $67 billion, the company would be able to refocus its technology portfolio and bolster its balance sheet from the divestment of the software assets. Controlling stake in VMware Inc, a cloud-based virtualization software company, is owned by EMC.
Dell’s Quest Software, which helps with information technology management is being planned to be sold off by the company. The SonicWall, an e-mail encryption and data security provider is also among the sale plans of the company, reported Reuters citing source information.
One of the sources that Reuters spoke to said that Dell would however retain Boomi, a smaller asset focusing on cloud-based software integration.
The sources however cautioned that the negotiations could still end unsuccessfully even as they informed that a formal agreement between Dell and the consortium of Francisco Partners and Elliott could be reached as early as this week.
Since the negotiations are confidential, the sources asked not to be identified. While Francisco Partners and Elliott did not immediately respond to requests for comment from Reuters, Dell declined to comment completely on the information.
Dell would be able to cap the program of divestitures that the Round Rock, Texas-based computer maker embarked on following its deal with EMC and the company would also be free it from some of its least profitable assets following the sale of Dell's software division.EMC shareholders are due to vote on the deal with Dell on July 19.
With the aim of expanding business in North America and bolster its services business, the information technology consulting division Perot Systems of Dell was agreed to be bought by Japan's NTT Data Corp in March this year for a price of over $3 billion.
Dell managed to raise $112 million in what was this year's first U.S. technology initial public offering – the public offering of the cyber security unit SecureWorks Corp of Dell in April.
The Dell software deal would represent its first major private equity investment since it hired Isaac Kim last year, even while Elliott has sought to buy companies in the past as part of its shareholder activist campaigns. Kim was hired by the company to help expand its capacity in leveraged buyouts and he was previously a principal at private equity firm Golden Gate Capital.
Elliot had also targeted EMC. The company was asked to spin off its stake in VMware or pursue other merger opportunities in 2014 by the hedge fund. Elliott subsequently voiced support for the deal with Dell after he had reached a settlement with EMC last year.
Private equity investment in the technology sector is the focus of Francisco Partners. It has invested in more than 150 technology companies since it was launched more than 15 years ago and has been able to raise about $10 billion in capital.

Christopher J. Mitchell

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