Dell confirms possible IPO or merger with VMware

Dell Technologies is considering a couple of options to reorganize itself including a public offering of common stock or a combination with business software maker VMware, its publicly held subsidiary.

In a SEC filing, Dell confirmed previously published reports about the possible IPO or a reverse merger with VMware, the $50 billion cloud computing company it already controls. The filing says that Dell would have preferred to keep it confidential but "because Dell Technologies owns ~82 percent of VMware, we are required to make a public filing with the US Securities and Exchange Commission,” the company stated in the filing.

VMware, too, issued its own statement without divulging any details about a potential deal with Dell. "Dell has been a tremendous partner since it became our majority owner and as we've accelerated our growth," said VMware CEO Pat Gelsinger, in the statement. "We look forward to Dell's continued support as we work to execute our growth plans in the years ahead."

Dell, the world’s largest privately held technology company, has been under pressure to boost profitability after its debt-laden acquisition of data storage provider EMC for $67 billion in 2016 failed to meet financial targets. The company said in the regulatory filing that it has repaid around $10 billion in debt since closing the EMC acquisition.

Combining with VMware would provide access to VMWare’s $11.6 billion in cash, helping Dell trim its $52.5 billion debt pile. Dell CEO Michael Dell has previously called VMware, which sells virtualization software that lets one server perform the tasks of many, the “crown jewel” of the EMC portfolio of companies.