Dell to Sell Its Cloud Business Boomi to Two Private Equity Firms for $4 Billion

By Mariliana Fotopoulou Monday, May 3, 2021

Dell, a major US-based tech company, has agreed to sell its cloud business unit Boomi to Francisco Partners and TPG, two private equity firms.

Dell display computers.

Focusing on Core Business

Eleven years after acquiring cloud company Boomi, Dell has agreed to part ways with its integration Platform as a Service (iPaaS) business unit. Two private equity firms will become new owners of Boomi in a business deal worth $4 billion, including debt, The Wall Street Journal reported last night.

Boomi uses cloud solutions to help applications communicate with each other by transferring data between apps so the data can be analyzed. Without Boomi and similar products, business applications usually aren’t able to talk to each other and share data.

California-based private equity company Francisco Partners will become a part-owner of the cloud company. The company has made more than 300 business investments so far, and it has a portfolio worth over $25 billion.

“Both of our firms have really distinguished ourselves in technology carve-outs. Dell was very focused on who was going to take care of their baby,” DJ Deb, chief executive of the company, told WSJ.

On the other hand, TPG is a larger private equity company that manages over $91 billion in assets. Recently, it agreed to become a majority owner of McAfee after securing a business deal with Intel. Furthermore, it bought a stake in DirecTV from AT&T.

“Software is eating the world. The average enterprise has about 850 applications, and today, less than 30% of them actually talk to each other,” said Nehal Raj, a partner at TPG.

Dell’s decision to sell its cloud unit Boomi comes as no surprise given that the tech company is undergoing a major restructuring process. Recently, the tech company announced it would spin off VMWare in a business deal that will generate between $9.3 billion and $9.7 billion to the former.

“By spinning off VMware, we expect to drive additional growth opportunities for Dell Technologies as well as VMware, and unlock significant value for stakeholders. Both companies will remain important partners, with a differentiated advantage in how we bring solutions to customers,” CEO Michael Dell said.

Dell owns about 81% of VMWare shares, which has a market capitalization of over $67 billion. VMware had been operating as a separate entity with its own executive team and board of directors. Shares of the company are also available for public trading.

On the other hand, Dell is valued at about $75 billion. Two companies will continue to work together, with a commercial five-year plan drafted to ensure both parties will benefit from the deal. The tech company will continue to sell VMware products while the latter will continue to work with Dell Financial Services.

VMware said it would have an “increased freedom to execute its strategy, a simplified capital structure and governance model and additional strategic, operational and financial flexibility, while maintaining the strength of the two companies’ strategic partnership.”

Dell added it would use the proceeds to pay down its debt as well as improve its overall positioning.

Summary

Dell will sell its cloud business unit Boomi to Francisco Partners and TPG in a deal worth $4 billion, shortly after agreeing to spin off VMWare.

About the Author


Headshot of Mariliana Fotopoulou

Mariliana has an MSC in Consumer Analytics and Business Strategy. She has a special interest in fast-moving industries and Big Data.

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