SAN FRANCISCO • Buyout firm Francisco Partners and the private equity arm of activist hedge fund Elliott Management are in advanced talks to acquire Dell's software division for more than US$2 billion (S$2.7 billion), three people familiar with the matter said.
Divesting the software assets will help Dell refocus its technology portfolio and bolster its balance sheet after it agreed last October to buy data storage company EMC for US$67 billion.
EMC owns a controlling stake in VMware , a cloud-based virtualisation software company.
Dell is seeking to sell almost all of its software assets, including Quest Software, which helps with information technology management, and SonicWall, an e-mail encryption and data security provider, the people said. One of them added that Boomi, a smaller asset focusing on cloud-based software integration, will be retained by Dell.
An agreement between Dell and the consortium of Francisco Partners and Elliott could be reached as early as this week, the people said, cautioning that the negotiations could still end unsuccessfully.
A sale of Dell's software division would free it from some of its least profitable assets and cap the programme of divestitures that the computer maker embarked on following its deal with EMC.
EMC shareholders are due to vote on the deal with Dell on July 19.
In March, Japan's NTT Data agreed to buy Dell's information technology consulting division Perot Systems for over US$3 billion to expand in North America and bolster its services business.
Dell also took its cyber security unit SecureWorks public in April, raising US$112 million in what was this year's first technology initial public offering in the US.
While Elliott has sought to buy companies in the past as part of its shareholder activist campaigns, the Dell software deal would represent its first major private equity investment since it hired Mr Isaac Kim, previously a principal at private equity firm Golden Gate Capital, last year to help expand its capacity in leveraged buyouts.
In 2014, Elliott called on EMC to spin off its stake in VMware or pursue other merger opportunities. Elliott reached a settlement with EMC last year and subsequently voiced support for the deal with Dell.