This seems the week of potentially massive mergers and acquisition. We have already heard how Microsoft may purchase game giant EA, and how that would be a disaster. Now, a report from CNBC suggests Dell is considering selling itself to VMware. Interestingly, Dell already owns 80 percent of VMware.
That means if the computing giant does sell to the company, it would be among the largest reverse mergers in history. Dell is believed to want to return to being a public company. Its board of directors will meet in February to discuss ongoing strategy. A reverse merger is among the subjects that will be addressed.
Dell transitioned from a publically-traded company to privately owned in 2013. Founder Michael Dell, alongside Microsoft and several other investors bought the company for $24.4 billion. Microsoft contributed $2 billion to the acquisition.
In 2016, the company acquired EMC for $67 billion, one of the largest tech purchases in history. In the process, Dell took control of 80 percent of VMware.
If a reverse merger does happen, it would be the biggest tech deal in history, allowing investors to monetize their stake and Dell to pay its $50 billion debt. To facilitate such an acquisition, publically run VMware would buy Dell and issue shares to private owners. These shares would then be sold publically later.
The major question around the deal is what would happen to Dell’s PC business? The company is currently the third largest PC manufacturer on the market. It sold 10.8 million PCs during the fourth quarter of 2017 and held a 15.2% market share.
Would a reverse merger with VMware result in the vendor changing its PC strategy? It seems unlikely at this point.
It is worth mentioning that this is all just rumor from inside sources at the moment. Neither company has offered any official information on the potential of this deal.