These Private Equity Firms Could Be Looking to Buy Hewlett Packard Enterprise

July 29, 2016, 8:07 PM UTC

Maybe Hewlett Packard Enterprise isn’t totally done restructuring after all. Perhaps it just wants to rebuild itself outside the scrutiny of the public markets.

According to a report by technology news site The Information on Friday, a group of private equity funds—including KKR, Apollo Global Management, and the Carlyle Group—are interested in buying HPE in a possible $40 billion-plus deal.

The report, which cites an unnamed source, said the private equity groups are interested in all of HPE, not just individual business units, like the IT services business group that was spun off and merged with Computer Sciences in May.

A Reuters report on Friday, however, countered by reporting the buyout groups are only interested in purchasing some of HPE’s software assets—not the whole company—in a deal worth $6 billion to $8 billion.

An HPE (HPE) spokesperson told Fortune that the company “does not comment on rumors and speculation.” Fortune also contacted the private equity groups involved and will update this story if they respond.

Regardless of the conflicting reports, it seems that HPE is undergoing another significant transformation again.

Ever since HPE split up with its PC and printer sibling HP, Inc. (HPQ) last November, the Meg Whitman-led company has continued a series of restructuring moves.

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For example, in addition to spinning off its IT services group, HPE also sold off a majority stake in its Indian outsourcing subsidiary Mphasis for $825 million in April. Two months later, HPE was reportedly interested in selling off select software business units, some of which were inherited from its disastrous $11 billion acquisition of Autonomy in 2011. Additionally, Whitman said in a June memo to employees that HPE was continuing to “simplify” and would consolidate all of its sales teams into one giant worldwide sales unit and would do the same with its marketing departments.

If HPE does indeed end up selling itself to the private equity funds and exit the public markets, it would follow the footsteps of two of its rivals: Dell and EMC. Dell became a private company when it sold itself to Silver Lake and CEO Michael Dell in 2013 for $24.4 billion, and EMC is in the process of being acquired by Dell in a deal worth $59 billion.

It’s possible that large private equity firms are more willing to consider big buyouts of struggling enterprise companies in light of the blockbuster Dell and EMC deal, a complex transaction involving Dell raising $45 billion in debt financing to help carry it through.

“Using lots of debt to do big deals is a key lever for buyout firms,” Sunil Dhaliwal, founder and general partner at venture capital firm Amplify Partners, told Fortune in an email. “And now that enterprise tech is well accepted territory for lenders, I think we’ll see a lot more buyouts here.”

Holger Mueller, a principal analyst and vice president of Constellation Research, said that it makes sense for HPE to consider going private given that its number one competitor is Dell, which “has the opportunity to transform itself without the quarterly pressure from the stock markets.”

“The transformation that HPE has ahead and that still, like the Dell one, needs to be shared to some point, is equally challenging and long,” Mueller explained. “The question for investors is, ‘Is the HPE stock already low enough to make this a worthwhile transaction?’”

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Legacy enterprise companies like HPE, EMC (EMC), Cisco (CSCO), and IBM (IBM) have all seen their businesses shrink with the rise of cloud computing in which giants like Amazon (AMZN) and Microsoft (MSFT) dominate, with Google (GOOG) on the rise. In cloud computing, companies sell computing, networking, and storage capacity on-demand to their customers, which negates the need for these customers to buy as much data center hardware as they once did.

For Whitman, a sell to private equity firms could mean that she is gearing up to leave HPE after nearly five years as CEO. Whitman has led HPE through several complex financial undertakings to make the company smaller and more nimble. A possible sell to private equity funds could represent an ending of sorts.

As Fortune‘s Barb Darrow wrote earlier this year, a possible exit by Whitman could mean that “in 2016, we will see Whitman’s ‘Mission Accomplished‘ moment.”