Is Dell Going to Sell To VMware In A Reverse Merger?

In 2015 Dell made the biggest take over of all times when it acquired EMC for $67 Billion. One of the main assets of that acquisition was VMware, which EMC had acquired in 2004. With the acquisition, Dell currently owns around 80% of VMware.

But now the plot thickens, as Dell is considering selling itself to the smaller VMware in a massive reverse merger that may very well be the biggest deal ever. The reason behind this strategy is Dell’s interest to get back to the public markets, after Michael Dell took the company private in 2013. This move will enable Dell to be traded publicly without going through a formal listing of a traditional IPO.

But the reason may also be found in the disruptive technology of cloud computing. Dell traditionally had a strong grasp of the enterprise IT market on the hardware side, and VMware had a similar grasp in enterprise IT virtualization solutions. But the market has been disrupted with the entrance of the public cloud vendors such as Amazon AWS and Microsoft Azure, enabling enterprises to avoid owning and managing their own data centers and instead run their workloads in the cloud. Traditional incumbents such as Verizon, HP and Dell tried fighting off by launching their own public cloud offering, but had to pull back after failing to compete. VMware also had to team up with Amazon to maintain its cloud strategy. Shifting to a more software driven approach targeted at the cloud native solutions may be part of Dell’s strategy to regain its position with the enterprises.

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