EMC plans to sell its Documentum business as part of a plan to shed assets before its takeover by Dell later this year, sources tell CMSWire.

Both EMC and Dell are eager to reduce the debt burden that will result from their pending $67 billion merger.

Round Rock, Texas-based Dell recently sold Dell Services, its information technology consulting division, to Japan's NTT DATA, for a reported $3.05 billion. And it has reportedly shopping its portfolio companies — Quest Software and SonicWall — to buyout firms including KKR & Co LP, Thoma Bravo LLC and Vista Equity Partners Management LLC.

Now EMC is trying to shed its Enterprise Content Division (ECD), which includes not only Documentum, but products like Project Horizon and InfoArchive as well.

“We looked for synergies between Documentum and Dell (EMC’s parent company to be) and didn’t find any,” a source who requested anonymity told CMSWire.

Neither EMC nor Dell have officially replied to CMSWire's requests for comment, Bloomberg is reporting similar news about the sale of Documentum.

A Long Rumored Sale

Dell’s purchase of data storage giant EMC would be the biggest tech deal in history. But it raises one big nagging question: How do you finance a $67 billion deal?

The answer, apparently, is by dumping non-core assets.

Documentum isn’t a great fit within EMC to begin with, as CMSWire has been explaining for the past two years.

It will be even less of a fit if EMC finalizes the merger with Dell, creating more of a computer hardware/data center business.

EMC acquired Documentum in 2003, around the same time it bought VMware. While the hopes for both companies were the same, they didn’t play out that way.

VMware was, and still is, EMC’s golden child, Documentum was its forgotten son that never really found its stride within EMC.

Not a Match

When we started discussing the fate of Documentum almost exactly two years ago, analyst Alan Pelz-Sharpe, formerly of 451 Research, told us it was time for the division to go, explaining:

“We believe it's time for EMC to divorce itself of IIG (now ECD), a product division that never really fit into EMC as a whole, and has continued to disappoint CEO Joe Tucci. There are two very good companies here, the storage and cloud giant EMC, and the business application wannabe IIG, aka Documentum. Both groups are trying to do the right thing, but find themselves pulling in different directions."

What opposing directions was Pelz-Sharpe talking about?

Enterprise Content Management software products are designed to help businesses store as little content as possible (it minimizes their legal liabilities and risks, among other things) while data center and storage products are designed to help store as much information as possible at the lowest possible price.

It’s also worth noting that the cultures between EMC headquarters customers and Documentum enthusiasts are so different that the groups have separate conferences, held on separate floors, during EMC World.

Not Even Close

Bring datacenter-maker Dell into the mix and the potential for synergy completely disappears.

Adrian Ho, a principal analyst at Ovum Research, told CMSWire that there was no way that Documentum would fit into Dell’s post EMC acquisition business.

“The merger is cloud driven with the datacenter at the heart of it all. This (Documentum at EMC) looks like a hobby business after the merger. Selling it makes sense,” he said.

Constellation Research analyst Holger Mueller echoed a similar sentiment. “Documentum is a good and healthy business, but no longer a strategic fit for the combined entity that clearly is going after the data center,” he said.

Who Would Buy?

While we’ve seen some outliers predict that the divestitures of Dell and EMC non-core assets would be fire sales, analysts like Mueller see Documentum as a “good, healthy business” that could be a money-making asset for its acquirer.

And who might that be, we asked.

“HPE could be interested. IBM may add to FileNet and be an option, too,” he said. OpenText is also on his list, if it could get regulatory approval to take out a key competitor.

“But to anyone Documentum will bring substantial revenue — both, private cloud as well as conversion to cloud going forward — and with many vendors desperate to show investors cloud growth — organic or through acquisition — Documentum is an interesting asset,” he said.

Legacy Technology

Constellation Research president Ray Wang isn’t hyped about Documentum’s technology. He refers to it as legacy, in comparison to Alfresco and M-Files (although he did not discuss Project Horizon.)

Wang agreed with Mueller that HPE might want Documentum for its current portfolio. He also noted that other players in the market looking to build on their business might want to buy an install base, which Documentum has.

He also mentioned that Google could potentially be interested in its patents but would have to re-architect for the cloud. It’s an interesting observation, especially because Google is finally showing proof that it’s serious about the enterprise.

That being said, Wang doesn’t think EMC will find a sweet deal.

“In general the tech at Documentum is behind the market and that’s why this is a hard unit to put on the block just like Dell Service was a hard sale. I honestly don’t think they will get the numbers they want as their products are past prime,” he said.

A sale to a private equity firm is always a possibility too, we should add.

(Have a tip or comment about the proposed sale? Let us know.)

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