Dell to sell Boomi Cloud Business to Francisco Partners and TPG for $4 Bn

Dell Technologies has stated that it will sell its cloud business, Boomi, in a $4 billion cash transaction to Francisco Partners and TPG Capital. The private equity firms have entered a definitive agreement that will close by the end of this year. “This proposed transaction positions Boomi for its next phase of growth. It is the right move for both companies, our shared customers and partners,” said Jeff Clarke, VC and COO, Dell Technologies. “For us, we’re focused on fueling growth by continuing to modernize our core infrastructure and PC businesses and expanding in high-priority areas including hybrid and private cloud, edge, telecom and APEX,” he added.

“Boomi pioneered the iPaaS category. We have tracked their growth for several years,” said Dipanjan Deb, co-founder and CEO, Francisco Partners. Brian Decker, Partner, Francisco Partners further added, “We strongly believe that Boomi is well-positioned to help companies of all sizes turn data into their most valuable asset.”

Nehal Raj, Partner, TPG capital outlined the relationship between the need for automation and data integration. He also added that the company's cloud platform helps drive digital transformation. Furthering the idea, Art Heidrich, Principal, TPG Capital added that TPG has a long history of partnering with corporate leaders like Dell Technologies to carve out and grow dynamic technology businesses. “We look forward to working with the teams at Boomi and Francisco Partners to accelerate the company’s growth as an independent entity,” they said.

About the deal

The company has not stated the additional terms of the transaction. Morgan Stanley & Co LLC and DBO Partners LLC acted as financial advisors to Dell Technologies. Skadden, Arps, Slate, Meagher & Flom LLP acted as their legal advisor.

Barclays, Citi and JP Morgan Securities LLC acted as financial advisors to Francisco Partners and TPG Capital. Ropes & Gray LLP, Paul Hastings LLP and Kirkland & Ellis acted as legal advisors to them.

Boomi-Dell Acquisition in 2010

In 2010, Dell had acquired the Boomi cloud business. The iPaaS, at the time, focus on the integration side of a business with its cloud-based software. Salesforce and many financial and marketing companies, thus, became its customers. In the release of the acquisition, Dell stated that Boomi would help businesses reap the full value of cloud computing.

Boomi offered a pure SaaS application integration platform that was cost-effective and less complex. It allowed the easy transfer of data between cloud-based and on-premise applications without the need for technical aspects.

The iPaaS platform currently has over 15000 customers all over the world.

Then why is Dell selling Boomi?

According to a Bloomberg report from April 2021, Dell has been cleaning up its balance sheet in recent years. It has also been hiving off a variety of businesses, for example, it is spinning off its stake in VMware, its most valuable asset (revenue at average 12% of total). The report also stated that the company is trying to reduce its dependence on hardware sales. It aims to transform into a seller of subscription-based computer services. Last year, it also sold its cybersecurity unit RSA for $2.08 billion to a private equity firm.

But, according to the company balance sheet, its PC and commercial sales drive its revenue. The company has solid, ever-increasing revenue, and bundled services only have increased its competitiveness. Thus, subscription-based models may prove a better business model.