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Dell Sells Boomi: 4 Biggest Reasons Why

From Project Apex to Dell Technologies’ massive debt, here are four big reasons why Dell is selling its cloud business Boomi to private equity.

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Dell’s $29 Billion Core Debt

Dell has been financially hindered by a massive amount of debt stemming from its historic $67 billion acquisition of EMC and VMware in 2016. Each quarter, Dell pays down billions on its core debt, including $2.4 billion during its most recent fourth fiscal quarter 2021.

As of February 2021, Dell’s core debt stands at roughly $29 billion with subsidiary debt of nearly $5 billion.

Although official financial terms of Dell’s sale of Boomi were not disclosed, the cash transaction is valued at a whopping $4 billion. Dell will likely use a sizeable portion of the funding gained from the sale of Boomi to pay down its large debt as part of its long-term strategy to receiving an investment-grade rating.

“We will continue to prioritize debt pay-down as part of our capital allocation strategy, and we are confident in our path toward an investment-grade rating,” said Dell Technologies Tom Sweet, executive vice president and chief financial officer, during the company’s most recent fourth quarter earnings call.

As part of the Dell-VMware spin-off deal, VMware will pay a special cash dividend of between $11.5 billion to $12 billion to the company’s shareholders, which will include around $9.5 billion for Dell Technologies. Dell is expected to use this injection of cash to pay down its debt.

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