With the aim of bringing down its $50 billion debt burden that it had acquired in recent years, the US based computer manufacturer Dell Technologies Inc is contemplating selling off its U.S. provider of cybersecurity services – SecureWorks Corp. The current market valuation of SecureWorks is estimated to be about $2 billion according to a report published by Reuters citing sources with knowledge of the issue.
Dell owns 85 per cent of SecureWorks and the computer maker is hopeful that it would be able to pay just a small part of its debt pile which it had ostensibly accumulated since its decided to transform into a publicly traded company a year ago in which Dell struck up a complex deal that included VMware Inc – its software subsidiary.
According to the Reuters report, investment bank Morgan Stanley is helping SecureWorks to chalk out a path for its sale off of the entire company which is still young in terms of formation.
The report did not carry any comments from either Dell or SecureWorks on the issue. No comments were also available from Morgan Stanley.
Atlanta based SecureWorks deal in providing information security solutions for its clients that are designed to ensure security of corporate network from hackers and cyberattacks. According to the company website, the company currently offers its services to about 4,300 clients spread across in more than 50 countries.
After acquiring SecureWorks in 2011 in a deal worth $612 million, Dell later made the company public in 2016. There has been an increase of 46 per cent in the shares of SecureWorks since it was made public.
Dell itself decided to become a publicly traded company in December last year after the company decided to repurchase shares related to its stake in VMware for $23.9 billion. Dell had acquired VMware as a part of the deal for its acquisition of the data storage company EMC in a deal worth $67 billion in 2016 as a majority stake in VMware was owned by EMC.
A traditional route for IPO was however not taken by Dell last year because of its concerns about investor and the stock market reactions to its $50 billion debt. That meant that Dell none of the IPO proceeds that Dell received could be put to use for brining down the debt pile.
In recent years, Dell has been trying to change its business focus from being a PC manufacturer into a company that offers broader products of information technology services under the leadership of its founder Michael Dell. The new business niches that the company is entering include storage and servers and networking and security businesses.
In the past, many of its non-core services have been sold off by Dell. For example, the software business of the company was sold out to buyout firm Francisco Partners in 2016 in a deal worth over $2 billion.
Earlier this month, the stake of activist hedge fund Elliott Management Corp increased its stake in Dell to for about 5.6 per cent.
(Adapted from Reuters.com)