We first got an inkling that Dell Inc. was interested in purchasing EMC Corp late last week, and today we received official confirmation of that deal. And as we expected back then, this a whopper of a deal — in fact, it’s being billed as the largest tech acquisition in history.
The world’s No. 3 PC maker — with the help of MSD Partners and Silver Lake — is offering up $33.15 per share in cash and special stock for EMC, valuing the deal at $67 billion. The $33.15/share price is roughly 28 percent higher than EMC’s share price at close of day Wednesday October 7th; the day before the first reports of the deal started trickling out. The share price also includes $9.10 worth of tracking stock for VMware, and Dell will hold a majority stake in company.
The mega deal has a “go-shop” provision built in, which will allow EMC to still field offers from other firms. However, there’s no serious concern on Dell’s part that a competing offer will be good enough to push it aside.
The combined companies of Dell and EMC, which will be helmed by Michael Dell, will also create the “world’s largest privately-controlled, integrated technology company” that “will be a leader in the extremely attractive high-growth areas of the $2 trillion information technology market.” Dell is currently the No. 2 server OEM in the world and has its own vast portfolio of IT services. EMC has a clear leadership position in digital storage and services, so the combined companies will be a force to reckoned with in the enterprise market.
It’s also interesting to note that Dell is bulking up and expanding its enterprise presence at the same time Hewlett-Packard is laying off tens of thousands of employees and preparing to split its business. HP and Dell are approaching the rapidly changing computing market with wildly different approaches, and it remains to be seen which is the “correct” avenue to take, but we must say that the synergies that Dell and EMC bring to the table are immediately obvious.
“We believe the strategic integration of EMC and Dell will generate unparalleled depth and breadth across servers, storage, virtualization and the next era of converged infrastructure, creating a global technology platform poised for sustained long term growth and innovation in the years to come,” said Dell CEO Michael Dell. “We are doubling down and increasing our investment in this differentiated market leader for the next paradigm of enterprise computing.”
“I’m tremendously proud of everything we’ve built at EMC – from humble beginnings as a Boston-based startup to a global, world-class technology company with an unyielding dedication to our customers,” said Joe Tucci, EMC Chairman & CEO. “But the waves of change we now see in our industry are unprecedented and, to navigate this change, we must create a new company for a new era. I truly believe that the combination of EMC and Dell will prove to be a winning combination for our customers, employees, partners and shareholders.”
Tucci will remain onboard to smooth the transition period leading up to the close of the deal, but it’s unknown at this time what his plans are once everything is finalized.
For his part, Michael Dell is adamant that by remaining a private company which doesn’t have to answer to prickly investors, it will be able to make quick decisions and navigate the vast minefield in industry that always threaten to derail even the most storied companies in tech.