DELL TO ACQUIRE EMC IN RECORD $67-BILLION TECH DEAL
SAN FRANCISCO: Dell is buying data storage company EMC in a deal valued at $67 billion.
Shareholders of EMC Corp. will receive about $33.15 per share, which includes cash plus tracking stock linked to part of EMC’s economic interest in the VMware business. VMware , a popular maker of virtualisation software that emulates different operating systems will stay an independent, publicly- traded company. Michael Dell will serve as chairman and CEO of the combined business.
Dell’s headquarters will remain in Round Rock, Texas. The combined enterprise systems business headquarters will be in Hopkinton, Massachusetts, where EMC is based.
The deal is targeted to close in the second or third quarter of Dell’s fiscal year ending February 3, 2017. It still needs approval from EMC shareholders.
Two years ago, Michael Dell succeeded in taking the company that bears his name private, giving him time and flexibility to adapt it to a rapidly changing technology industry
No longer can a company like Dell thrive simply by making personal computers, the business its founder began in his dorm room three decades ago. Michael Dell recognised that fact when he and financial backer, investment firm Silver Lake, took the company private two years ago, with the goal of continuing to move toward corporate computing services away from the glare of stock markets.
Buying EMC will give Dell one of the biggest names in computer data storage, adding to offerings such as network servers, corporate software and mobile devices.
“We’re continuing to evolve the company into the most relevant areas where IT is moving,” Dell had said in an interview. “This deal just accelerates that.”
The takeover is an ambitious bet on a number of fronts. It would mean making Dell even bigger at a time when companies of all stripes believe smaller is better. Many tech firms have announced plans to break themselves into
components, each devoted to one market.
Moving away from the conglomerate model will also mean that each business will have greater focus, resulting in a higher stock price for the new companies.
Hewlett-Packard, for instance, is close to completing a split of its enterprise-services business from its personal computer arm. EBay spun off its PayPal payments business from its core e-commerce market division this year. Dell and his counterpart at EMC, Joe Tucci, argue that sticking with the one-stop-shop business model will help it draw customers eager to buy servers.
Founded outside Boston nearly four decades ago, EMC has been one of the last huge East Coast tech companies. But it has struggled over the past decade as the cost of data storage has plummeted and as additional acquisitions have failed to reverse its fortunes.