Dell is said to be ready on Monday to announce an agreement to sell of its non-core IT consulting division to Japan’s NTT Data for $3.5 billion, according to a report in Reuters.
The move will allow the American firm to cut some of the $43 in debt it is taking onboard in its cash-and-stock acquisition of data storage company EMC Corp, a deal which is worth almost $60 billion.
The sale means that NTT Data, which is one of the largest tech services companies in the world, will be able to gain a larger footprint in the US, where it aims to expand into healthcare IT, insurance and financial services consulting.
The agreement is subject to NTT Data’s board approval when it meets in Tokyo, sources said, asking not to be identified as the deal is not yet official.
Dell has also been making efforts to syndicate $10 billion of its financial package for EMC, called “term loan A”. This is expected to increase in size by $500 million to $750 million, with the additional funds to downsize some of the more expensive tranches of the remaining $33 billion worth of finance.
The banks participating in term loan A has expanded from either underwriters to twenty five, with more expected to join before the syndication completes next week.
Dell has thus far declined to comment, while NTT has not responded to Reuters’ requests for comment.
Previously know as Perot Systems, Dell’s IT services unit is a large provider of tech consulting to hospitals and government departments, founded in 1988 by Ross Perot, it was bought by Dell in 2009 for $3.9 billion.
Dell has since then divested some of the unit’s operations, and integrated others, which is not included in the sale. Some of the capabilities of the unit were seen as redundant by Dell following the acquisition of EMC.
Dell has also apparently spoken to private equity firms about selling Quest Software, as well as SonicWall, an email encryption and security provider, says Reuters. Quest and SonicWall may together be worth up to $4 billion.
Dell’s buyout of EMC, backed by founded and chief executive Michael Dell plus equity firm Silver Lake Partners, is subject to approval by EMC shareholders, with the company expecting a vote on the Dell deal in May with completion between July and October.
Larry Banks is a keen follower of technology and finance. He has worked for a variety of online publications, writing about a diverse range of topics including mobile networks, patents, and Internet video delivery technologies.