Dell already owns around 80% of VMware thanks to its deal with EMC back in 2015. There were reports last week that Dell may be looking to purchase that final 20% of the company and merge VMware into Dell to become one company. However, now it appears that Dell may be looking to do a reverse merger, in an attempt to help pay off some debt the company has. A reverse merger would mean that the smaller company is buying the larger one, and it would also allow Dell to be publicly traded once again, after the company’s founder, Michael Dell, took the company private back in 2013, without doing a formal listing. Additionally, this would likely become the biggest deal in tech history, beating out Dell’s $67 billion deal for EMC in 2015.
VMware was a big part of the EMC sale to Dell back in 2015. It’s the part of the company that really made money, and it’s also the part that Dell didn’t buy entirely. VMware is around a $60 billion company, but it has been losing revenue in the past few years, largely due to companies moving to the cloud and relying less on VMware. VMware is big in virtualization, and while it is a technology that is still used in the business space, it’s not as popular as it was a decade ago. It essentially allows companies to run multiple machines on one set of hardware. It’s also good for running different operating systems on a single laptop, though that part of VMware’s business isn’t as popular.
A reverse merger for Dell and VMware is a rather interesting one. And many analysts are questioning the strategy here for Dell. But the main consensus here is the fact that Dell is looking to go public once again, but this way it wouldn’t need to do an IPO once again. On top of that, it would allow Dell to pay off some of its debt. But there could be other reasons for Dell wanting to do a reverse merger with VMware. Of course, representatives from both Dell and VMware have decline to comment on the matter, which is common with reports such as these.
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