Dell likely to sell RSA Security to PE firm STG Partners for $2 bn

Dell Technologies Inc. is reportedly closing a deal to sell RSA Security LLC to a private equity firm for around USD 2 billion. The Wall Street Journal reported that STG Partners LLC, a private equity firm that focusses on technology, will take RSA from Dell’s hand.

RSA, which was founded as a boutique cybersecurity firm in 1982, was bought over by EMC Corporation in 2006 for USD 2.1 billion. It then operated as a subsidiary of EMC until the latter was acquired by Dell Technologies in 2016. RSA then came under the Dell umbrella of brands.

RSA has a clientele numbering 30,000, mostly enterprises ranging from retailers, banks, manufacturers of consumer goods and other commodities. The Massachusetts-based firm has expertise in maintaining encrypted data sets owned by corporations and in sanitizing internal networks.

It also organizes security conferences where the latest standards are showcased, and working papers, presented. The next such conference is slated to take place this month in San Francisco. With more electronic devices accessing the internet than ever before, the frailties of existing algorithms are being exposed through innovative means like phishing, malware, and other strains of infections.

Moreover, the technological component of the modern enterprise, irrespective of the sector it operates in, has placed cybersecurity firms in high demand, from institutional investors, private equity, financial companies, and also hardware companies.

Broadcom Inc., in August 2019, announced that it would acquire the enterprise security division of Symantec for USD 10.7 billion. The sale closed in November, with Symantec being rechristened NortonLifeLock. Other security firms have also seen their valuations swell. McAfee, whose shareholders include Intel and a number of private equity firms, has reportedly considered going public.

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Dell inherited RSA via its USD-60 billion acquisition of EMC Corp in 2016, but the company’s valuation has remained volatile. The WSJ has estimated its current valuation at around USD 2.1 billion, roughly the same price EMC Corporation paid for it in 2006.

In 2018, Dell returned to the public market, after private equity firm Silver Lake helped the tech company’s eponymous founder Michael Dell, take it public in 2013. Instead of a public offering, Dell bought out shareholders of pre-existing stock in a complex USD 24 billion cash-and-equity deal.

The sale of RSA Security will likely allow Dell to focus on it is core personal-computer and data-storage businesses.



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