VMware May Buy Dell in Potential ‘Reverse Merger’

Jan. 29–Dell Technologies might be pursuing a reverse merger with VMware, as reported Monday in Yahoo Finance. According to people familiar with the matter, in what might likely be biggest deal in the history of the tech industry.

The reverse merger, where VMware’s $60 billion cloud computing and virtualization software company would purchase the larger Dell, would be in the hopes of being traded publicly, giving investors who had backed Dell in 2013 an opportunity to pay off portions of the company’s $50 billion debt.

The move is part of Dell’s larger push to explore a full spectrum of options that would encourage growth through acquisitions, a possible IPO, and may the lead the company to go public without going through a formal listing.

When Dell acquired EMC in 2015 for their platform virtualization software, that $67 billion buy gave Dell 80 percent of VMware, then recognized as an early trailblazer in virtualization and well-known innovator in giving companies improvements on ways to run their data centers more efficiently by packing multiple “virtual” computers on a single piece of hardware.

The play is seen as an indomitable strategic initiative under the eyes of Dell higher-ups and the company’s advisory team, moving forward with a board of directors meeting later this month to talk options, many of which are still in the prematuration stages and have yet to experience much movement.

If VMware were to purchase Dell, shares would then be issued to Michael Dell and Silver Lake, private owners of Dell, for the leg-up of collecting on their investment in the company, people knowledgable on the matter said.

VMware revenue has accrued in value year after year, annual sales rising 6.7 percent in 2016 after nearly six years of double-digit percentage increase, and net income topping in at $1.2 billion, what was an all-time high for the company for that year.

Spokespersons from Dell and VMware have declined to comment.

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