Exclusive - Francisco Partners, Elliott near Dell software deal-sources

By Greg Roumeliotis and Liana B. Baker

REUTERS - Buyout firm Francisco Partners and the private equity arm of activist hedge fund Elliott Management Corp are in advanced talks to acquire Dell Inc's software division for more than $2 billion, three people familiar with the matter said.

Divesting the software assets will help Dell refocus its technology portfolio and bolster its balance sheet after it agreed in October to buy data storage company EMC Corp for $67 billion. EMC owns a controlling stake in VMWare Inc, a cloud-based virtualization software company.

Dell is seeking to sell almost all of its software assets, including Quest Software, which helps with information technology management, as well as SonicWall, an e-mail encryption and data security provider, the people said.

Boomi, a smaller asset focusing on cloud-based software integration, will be retained by Dell, one of the people added.

An agreement on the deal could be reached as early as this week, the people said, cautioning that the negotiations could still end unsuccessfully.

The sources asked not to be identified because the negotiations are confidential. Dell declined to comment, while Francisco Partners and Elliott did not immediately respond to requests for comment.

(Reporting by Greg Roumeliotis in New York and Liana B. Baker in San Francisco; Editing by Richard Pullin)