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Dell Said To Be Talking To Buyout Firms, Citigroup About Sale Of SonicWall, Quest, Perot

Dell is in serious discussions with several well-known buyout firms about the possibility of their purchasing SonicWall and Quest Software, and with Citigroup about selling Perot Systems in deals that could significantly cut the debt that would result from its EMC acquisition, according to Reuters.

Dell may be in talks to sell up to $10 billion or more in assets as a way to help ease its pending acquisition of storage and cloud giant EMC.

Reuters on Tuesday reported that Round Rock, Texas-based Dell is talking to three equity buyout firms, including KKR & Co LP, Thoma Bravo LLC, and Vista Equity Partners Management LLC, about the possibility of purchasing Dell's Quest Software business and its SonicWall security division for about $2 billion each.

Dell is also in working with Citigroup as part of a move to sell its Perot Systems IT services business, estimated to be worth between $5 billion and $6 billion, to one of several large U.S.-based and foreign services companies, Reuters reported.

[Related: What Will A Merged Dell-EMC Look Like?]

Reuters early last month first reported the possibility that Dell might be looking to sell about $10 billion in assets.

Dell spokespeople were unable to respond to a request for more information by publication time.

Those deals, if consummated, would go a long way toward helping Dell pay for its planned $67 billion acquisition of EMC. Dell is expected to take on about $49.5 billion in debt as part of the acquisition, with the rest from cash and outside investments.

The sales of Quest and SonicWall in particular would also simplify the acquisition given the large degree of overlap between Dell and EMC in their current software and security businesses. For example, when it comes to data protection software, EMC's Avamar, NetWorker and SourceOne Archiving applications and Mozy cloud storage offerings compete to varying degrees against Dell's AppAssure, NetVault Backup and vRanger offerings.

In 2012, Dell acquired AppAssure, then a stand-alone provider of data protection software. Later that same year, Dell followed up with its acquisition of Quest Software, giving the company a full portfolio of storage, security and management software platforms, including NetVault Backup and vRanger.

Dell later combined them into the Dell Software Group, and in November reorganized that group to reallocate resources.


Meanwhile, on the security side, Dell has a wide range of security software buttressed by its March 2012 acquisition of SonicWall. Dell is pushing SonicWall higher into the enterprise, releasing earlier this year the first major upgrade to its SonicWall TZ series firewall in nearly six years.

EMC's RSA is one of the best-known security brands in the industry, and is also the name of the security industry's best-known security conference. RSA earlier this year released a new family of Via smart identity solutions that run from the endpoint to the cloud.

In 2009, Dell acquired Perot Systems for about $3.9 billion as a way to move into the enterprise services business.

The SonicWall, Quest, and Perot Systems deals likely will not have a major impact on channel partners primarily because they have been essentially run as separate businesses, said Michael Tanenhaus, principal at Mavenspire, an Annapolis, Md.-based solution provider and long-time Dell channel partner.

Dell's SonicWall business is a big channel play, Tanenhaus told CRN.

"But since Dell kept SonicWall as a separate organization, the biggest change would be new ownership," he said. "Dell might sign a reseller agreement with SonicWall. Regardless, a sale would mean SonicWall would be evaluated by customers fairly against the competition. Today, SonicWall gets overlooked by some customers because it is part of Dell, while some customers purchase SonicWall because it is a part of Dell."

Quest Software, like SonicWall, has been run separately from Dell's main business, Tanenhaus said.

"We were Quest partners before the acquisition, and there was little change afterwards," he said. "And, like SonicWall, Quest would get its own evaluation by customers separate from Dell."

While Dell has been talking about having a large software business, the SonicWall and Quest offerings are not core to Dell, Tanenhaus said.

"Dell has been moving quickly in a software-defined data center direction," he said. "But if you think about where software-defined data center lives, it's within Dell main, and not in the Dell Software Group."


Perot Systems, on the other hand, has never been a channel-friendly offering, Tanenhaus said. "Perot has higher-order technology, but not a lot of product," he said. "Many of Dell's services are SKU'd for the channel, but Perot does mostly custom work for large organizations, and is handled by Dell directly."

Tanenhaus said there have been many rumors flying around Dell's planned EMC acquisition. "This all could still be the same rumors, with just a different spin on them," he said.

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