Can Partners Expect An RSA-SecureWorks Security Spinoff In Wake Of Dell-EMC Deal?

With Dell's blockbuster move earlier this week to acquire RSA parent EMC, the question remains what the combined tech giants have in store for their security partners.

Dell put weeks of rumors to rest Monday, revealing its intent to acquire EMC for $67 billion, a deal that would be the largest in tech history and bring the entire EMC Federation, including RSA, under the Dell umbrella. The deal is expected to close in the third quarter of 2016.

In a media conference call from EMC's Hopkinton, Mass., headquarters this week, CEO Michael Dell was vague about the company's plans for RSA, although he said there have been a "number of discussions about security" and what the combination of RSA, SecureWorks, SonicWall and AirWatch capabilities could look like.

[Related: CRN Exclusive: EMC's Jeremy Burton Discusses Dell Bid, Cisco Relationship, And Customer Choice]

’We have great partners within the system integrator community. Their reach gives us great opportunities," Dell said on the call. "As we go ahead and compete this transaction, we'll tell you more about our plans."

Allen Falcon, CEO of Westborough, Mass.-based Cumulus Global, a Dell partner, said the move was a clear win for the Dell storage business, especially with the addition of VMware.

"I think this is a great move for Dell. They are an instant enterprise player," Falcon said.

However, implications for the security business are less clear. Prior to the acquisition, sources with knowledge of the information told CRN that EMC had been in serious discussions to either sell or spin off RSA as an independent company, with an aim for an IPO in 2017.

Dell's SecureWorks business, the result of the company's $612 million acquisition four years ago, also has been reported to be taking steps toward an IPO and has already filed confidential initial public offering papers with the Securities and Exchange Commission, according to a report by The Wall Street Journal earlier this month.

Private equity firm Silver Lake Partners, which helped Dell go private in 2013, addressed the possible spinoff in July at a Fortune event, with managing partner Egon Durban saying the duo were considering spinning out or combining certain high-growth businesses similar to the way EMC treats its federation companies.

RSA did not respond to CRN requests for comment on what the deal means for the company or its plans for the future.

Solution providers said an RSA spinoff could make a lot of sense. One partner, who did not want to be named, compared the deal to the Symantec-Veritas deal in 2005, which the security vendor is now effectively undoing before the end of the year. Both of the deals were about creating synergies between storage and security, the partner said, and "there was none, at least that could be found in those deals."

By nature of the EMC Federation, which operated as complete, separate organizations, the partner said an RSA spinoff or sale would be "easy" with "little or no disruption."

Other solution providers said the big win for Dell in the EMC deal is growing its portfolio to become a "one-stop shop" for enterprise solutions. With that in mind, it would have less of an advantage in spinning off RSA and should use the opportunity to figure out how to leverage its capabilities, said Cumulus Global's Falcon.

"RSA has a pretty good foothold in the enterprise market. The opportunity for Dell would be to bring it down to the midmarket and the SMB sectors, where Dell exists but EMC never did," Falcon said.

As it does that, Falcon said the strength of the RSA brand will benefit Dell.

"RSA is a benchmark brand for the security industry," Falcon said.

MATT BROWN AND JOSEPH F. KOVAR contributed to this story.

PUBLISHED OCT. 13, 2015