News

Consortium Buys RSA Portfolio from Dell for $2 Billion

• By Kurt Mackie
• February 21, 2020

A consortium of companies has purchased Dell's RSA security solutions businesses, including the RSA Conference, in an all-cash deal valued at $2 billion.

The RSA purchase was led by Symphony Technology Group (STG), AlpInvest Partners and the Ontario Teachers' Pension Plan Board, according to an STG announcement on Tuesday, which described the deal as a "definitive agreement." The consortium will be acquiring "RSA Archer, RSA NetWitness Platform, RSA SecurID, RSA Fraud and Risk Intelligence and RSA Conference" after regulatory approvals.

The deal is "expected to close in the next six to nine months," the STG's announcement indicated.

Dell, in its own announcement, described the sale of its RSA assets as giving it "greater flexibility to focus on integrated innovation across Dell Technologies." Until the transaction closes, nothing will change for its RSA business segments, the announcement added.

"RSA, STG and Dell Technologies will work closely together after the transaction closes to ensure a smooth transition, and to provide all of our stakeholders with the same level of dedication, service and support they've come to expect from RSA," said Rohit Ghai, RSA's president, in a released statement.

Dell and Debt
Dell had acquired RSA when it bought EMC in 2016 for $67 billion, which included the purchase of virtualization giant VMware, noted VDC Research analysts Steve Hoffenberg and Chris Rommel in a February "Dell Sells RSA" VDC View publication (PDF download).

Dell had lots of debt to pay off from the EMC purchase. It later spun off VMware as a separate entity, but kept a majority stake, the researchers added.

Dell had also acquired IT solutions company Quest Software in 2010 and firewall appliance maker SonicWall in 2012, which became part of the Dell Software Group. The Dell Software Group was later sold off in 2016, the researchers noted.

Dell's motivations for selling its RSA assets might not have been altogether due to paying off past acquisition debts. RSA's hardware security token business may not have been the most robust, the researchers suggested, due to software alternatives in the market. However, Dell didn't break out the actual numbers on that RSA business segment, so that's speculation, they added.

Precedents
The researchers generally noted that acquisitions of security software companies haven't always gone so well, especially when the deal has involved marrying software and hardware companies. However, Dell did give RSA a "year's long test run," they added.

There have been other examples where hardware companies buying security software companies didn't stick. For instance, chipmaker Intel bought software security firm McAfee in 2011 for $7.7 billion. Intel later spun off McAfee as separate entity in 2017, the researchers noted.

More recently, in November, chipmaker Broadcom bought Symantec's enterprise security solution for $10.7 billion. However, given past precedents, the researchers expressed skepticism about that deal's endurance. Broadcom would need to make security "a greater portion of its overall business" to succeed with the Symantec purchase, they suggested.