UPDATED 13:02 EDT / DECEMBER 02 2015

theCUBE Live With Michael Dell NEWS

Here’s how Dell plans to pay back its debt from the EMC merger

Dell Inc. is having an almost suspiciously hard time keeping the lid on its plans to sell the market on its record-breaking acquisition of EMC Corp for $67 billion. Unnamed insiders leaked this week that the company is negotiating with a group of big-name private equity firms to offload several of its secondary businesses in an effort to quickly start paying back the approximately $50 billion in debt that had to be raised to finance the deal.

The faster Dell can bring its balance sheet out of the red, the less interest will have to be returned to creditors, leaving more capital for competitive efforts to counter the threat from rivals like the newly independently Hewlett-Packard Enterprise. The data center giant’s chief executive, Meg Whitman, has not surprisingly emerged as one of the most vocal critics of the EMC deal, going as far as stating that the move will “keep them from better serving their customers” in an internal memo that leaked under similarly dubious circumstances.

But Michael Dell was quick to shrug off her claims in an interview with Bloomberg TV a month ago, during which he also revealed his intentions to pay back “tens of billions of dollars” to creditors over the next two years. The full picture started to emerge shortly thereafter from early rumors of an asset sell-off that has now been revealed to include its Quest management automation and backup business, the SonicWall security unit and professional services arm Perot Systems. All three came under Dell’s wing through acquisitions.

Much more importantly, they also overlap with the assets that the company is gaining through EMC. Selling them off would remove any potential structural efficiencies that might undermine the deal and help reduce Dell’s debt by about $10 billion at the same stroke, according to the insiders who released word of the move to Reuters. Approximately $5-6 billion is expected to come from Perot Systems alone, while the remainder $4 billion that the sale is set to generate is split about equally between Quest and SonicWALL.

On the buyer’s side of the negotiations table are KKR & Co LP, Vista Equity Partners Management LLC and Thoma Bravo LLC, which originally owned the security business until selling it to Dell for roughly $717 million in 2010. According to a separate set of rumors that leaked early last month, Michael Dell hopes to bolster the funds that will be raised through the sale by putting up EMC’s Pivotal subsidiary on the stock exchange after the merger closes next year.

Photo via theCUBE

A message from John Furrier, co-founder of SiliconANGLE:

Your vote of support is important to us and it helps us keep the content FREE.

One click below supports our mission to provide free, deep, and relevant content.  

Join our community on YouTube

Join the community that includes more than 15,000 #CubeAlumni experts, including Amazon.com CEO Andy Jassy, Dell Technologies founder and CEO Michael Dell, Intel CEO Pat Gelsinger, and many more luminaries and experts.

“TheCUBE is an important partner to the industry. You guys really are a part of our events and we really appreciate you coming and I know people appreciate the content you create as well” – Andy Jassy

THANK YOU