Dell is currently considering a sale to VMware, the company which it already controls thanks to an 80 percent stake, in an attempt to go public once again using a reverse merger strategy.
The firm’s board of directors will meet next month to discuss several strategic moves, including the reverse merger, according to a report from CNBC, which adds that the goal is to help owners monetize their investment.
In 2013, Dell turned from a publicly-traded company to privately-owned after founder Michael Dell and private equity firm Silver Lake, as well as a number of other investors, including Microsoft, purchased the firm for $24.4 billion. Microsoft itself offered a loan of $2 billion in an attempt to support the PC ecosystem.
Dell eventually purchased EMC for $67 billion in 2015, and took over 80 percent of VMware, which is currently valued at $60 billion.
VMware, which is a public company, could purchase Dell and then issue shares to the existing private owners, only to have them sold on the public market afterwards, the cited source mentions. This way, Dell could manage to pay at least part of its $50 billion debt, it says.
The PC business
One of the concerns should the reverse merger go trough is the potential impact it could have on the company’s PC business.
Dell is currently the world’s third-largest PC manufacturer, with Gartner data showing that in the fourth quarter of 2017, the company sold a total of 10.8 million PCs for a 15.2% market share. This is up from 10.7 million units sold in the same quarter the year before. For comparison, HP was the leading vendor with 16 million sold units during the quarter.
Dell, however, is very unlikely to adjust PC plans in case this strategic move is embraced, especially because the final goal appears to be monetizing investments in the company and paying the debt.
As with anything coming from insider sources, Dell hasn’t commented on this report, though more information should emerge following the meeting that the company’s board will hold in February.