June 19, 2021

wsj.com

Dell nears deal to sell Boomi to TPG, Francisco Partners

Dell Technologies Inc., is close to a deal to sell its Boomi cloud business to private-equity firms Francisco Partners and TPG, according to people familiar with the matter, part of a larger reordering of the PC and data-storage giant’s business.

Boomi specializes in integrating different cloud platforms for companies. Dell agreed to acquire the company for an undisclosed amount in 2010, a statement showed at the time.

 Dell has been cleaning up its balance sheet in recent years and hiving off a variety of businesses. The company announced plans last month to spin off its stake in infrastructure software provider VMware Inc., its most valuable asset.

In 2016, Francisco Partners teamed up with Elliott Management Corp. to acquire Dell Software Group, which included Boomi as well as the Quest and SonicWall businesses. Dell wasn’t interested in parting with Boomi at that time but has decided to do so now after a broader strategic review that resulted in the announcement last month it would spin off its 81% stake in VMware Inc., the people familiar with the matter said.

VMware, a major player in the market for cloud software, has a market capitalization of nearly $70 billion, but investors have been frustrated, believing its value hasn’t been reflected in Dell’s share price. While Boomi is fast-growing, it doesn’t produce a lot of profit, the typical metric by which Dell’s shares are valued, the people said.

Investors have cheered Dell’s move to part with VMware, with the stock roughly tripling from its pandemic low in March of last year. The shares closed Friday at $98.33, giving the company a market value of about $75 billion.

Based in San Francisco, Francisco Partners focuses on partnering with technology companies. Founded over 20 years ago, it has made over 300 investments and manages more than $25 billion in assets.

The company is trying to reduce its dependence on hardware sales and transform into a seller of subscription-based computer services. While that shift is ongoing, the company still gets about half of its revenue from sales of personal computers to commercial and consumer customers. Dell Is Said to Explore Sale of Boomi Cloud Business.