Monday, April 22, 2024

Dell Buys EMC for $67 Billion in Historic Deal

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The rumblings were true. Privately-owned Dell and its owners, founder and CEO Michael Dell, MSD Partners and Silver Lake, announced today that the company is acquiring Hopkinton, Mass. data storage giant EMC in a transaction valued at $67 billion, the largest technology deal in history.

EMC shareholders are set to receive $24.05 per share, along with a tracking stock that accounts for EMC’s majority share of VMware, which will remain a publicly-traded company. EMC currently has an 80 percent stake in the virtualization innovator.

The combined technology titan will be better positioned to pursue high-growth segments of $2 trillion IT market, including the software-defined data center, enterprise mobility and hybrid cloud computing, according to the executives at the companies.

Upon the deal’s close, expected to take place in mid-2016, EMC will be a wholly-owned subsidiary of Dell. The companies expect EMC’s high-end business IT portfolio to complement Dell’s strength in the small and midsized business (SMB) technology markets.

EMC CEO Joe Tucci, whose company recently experienced some weakness in its traditional storage business, characterized the move as a way to successfully navigate a changing enterprise IT landscape.

“To keep us growing and thriving through the truly historic changes that are gripping our industry, and to help assure we capitalize on the vast opportunity before us, we have decided that creating a new company with Michael Dell, an industry colleague and noted leader, and the team at Silver Lake, was the best way to position EMC for success going forward,” said Tucci during an inventor conference call this morning.

The historic deal is also expected to result in a massively powerful and potentially influential corporate entity. “The coming together of EMC and Dell will create a powerhouse in the technology industry with more than [$]80 billion in revenues.”

Michael Dell said the company’s privately-controlled structure “will provide the same freedoms that Dell enjoys today,” in an open letter to customers. “The freedom to invest in a future that lies beyond the next quarter. The freedom to pursue a consistent technology strategy,” he continued. “The freedom to accelerate our innovation. The freedom to streamline decision making and eliminate onerous processes.”

Last summer, EMC’s management reportedly faced pressure to sell off VMware by activist investor Elliott Management. Shedding Wall Street’s watchful eye will sharpen the newly-formed company’s focus on customer needs, suggested Mr. Dell.

“Being privately controlled, along with our investments in R&D and innovation will give us unmatched scale, strength and flexibility to help you achieve your goals,” he wrote. “I am excited to work with the EMC, VMware, Pivotal, VCE, Virtustream and RSA teams, and I am personally committed to the success of our new company, our partners and above all, to you, our customers.”

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.

Photo courtesy of Shutterstock.

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