Round Rock-based Dell Inc. is selling its software group, part of an effort to sell assets to prepare for its acquisition of data storage company EMC Corp.
Reuters is reporting that the deal to buy Dell Software Group is valued at more than $2 billion. The software group specializes in data analytics and protection, systems and information management software.
Private equity firm Francisco Partners and hedge fund Elliott Management Corp. confirmed on Monday through a regulatory filing with the U.S. Securities and Exchange Commission that they are buying the software business.
As part of the deal, the two firms will be acquiring several software firms that Dell Inc. had previously purchased, including security provider SonicWall and IT manager Quest Software.
Dell spokesman David Frink said on Monday that the sale of the software group is part of a strategy to streamline Dell's portfolio of businesses "by divesting some non-core businesses."
Dell's software group is a relatively small portion of the tech company's business, bringing in $334 million in revenue for the first quarter of Dell's fiscal year 2017.
That's only 2.7 percent of the company's $12.5 billion in total earnings that quarter.
The goal of selling the software group is to "create the industry's most relevant enterprise technology company... with a specific focus on enterprise solutions and converged infrastructure," Frink said.
Portions of Dell Inc.'s Central Texas workforce will be impacted by the sale. Frink said there are some sales positions for the software group that are based in the Austin area.
"A lot of the sales team is located here," Frink said. When the deal is completed, which is expected to happen in the fourth quarter of Dell Inc.'s fiscal year, some of those team members will transition to Francisco Partners, Frink said, likely under the names of Sonic Wall or Quest Software.
Frink said because Dell Software Group is so intertwined with operations and support functions of Dell Inc., the company has agreed to provide "transitional support for key back office functions," such as human resources and finance, until Francisco Partners and Elliott Management can provide support.
Financially, this deal might not be much of a windfall for Dell Inc. The Wall Street Journal reported that Dell bought SonicWall Inc. for $1.2 billion and Quest Software Inc. for $2.36 billion. Both were purchased in 2012.
EMC shareholders will vote on July 19 whether to approve the deal with Dell Inc.
Dell Inc. has shed a number of assets in preparation for its $67 billion deal to buy EMC. Previously the tech firm sold its IT services unit, and held an initial public offering for SecureWorks, a cybersecurity business.
This latest sale is yet another signal that Dell Inc. is increasingly shifting away from a previous emphasis on building its expertise in software toward data storage.
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