Lawsuit seeks to block Dell’s $67 billion deal for EMC
EMC shareholder says Dell’s $67B proposal undervalues data firm.
An EMC Corp. shareholder has filed a federal lawsuit seeking to stop Dell Inc.’s proposed $67 billion acquisition of EMC, claiming the deal undervalues the company and would harm its shareholders.
EMC shareholder Philip Stull of Englewood, Colo. — who filed the lawsuit in federal district court in Massachusetts, where EMC is based — claims that the proposed deal is “the product of an unfair and flawed process, and does not offer (shareholders) sufficient or adequate consideration.”
The lawsuit asks the court to block the acquisition, and seeks class-action status.
Round Rock-based Dell Inc. — which is the largest private employer in Central Texas, with about 14,000 local workers — in October announced plans to buy data storage giant EMC. The deal, which also involves Dell investment partner Silver Lake Partners, would be the biggest information technology merger in history.
The deal will require the approval of EMC shareholders. It is targeted to close in the second or third quarter of Dells fiscal year ending Feb. 3, 2017.
The Dell offer valued EMC at $33.15 a share. Dell will pay $24.05 per share in cash and give EMC shareholders a special stock that tracks the share price in VMWare Inc., the virtualization software maker majority-owned by EMC.
Stull’s lawsuit contends that EMC.’s value “is materially in excess of the amount offered in the proposed transaction.” It also alleges that despite EMC’s “prospects for future growth and success,” EMC’s board “caused the compa-
ny to enter into the merger agreement, pursuant to which EMC will be acquired by Dell for inadequate consideration.”
A Dell spokesman declined to comment on the lawsuit.
EMC’s shares closed Wednesday up 21 cents at $25.46.
The lawsuit is at least the second filed seeking to stop the deal. In October, another EMC shareholder filed a lawsuit in state court in New York seeking to block the deal, alleging that its $67 million price tag undervalued EMC.
Earlier this week, technology website Re/code, citing unnamed sources, reported that Dell’s planned acquisition of EMC could run into a tax barrier as large as $9 billion that could derail the deal. Some key aspects of the deal might not qualify for the sort of tax treatment that Dell insiders consider essential for the transaction to succeed, Re/code reported. A Dell spokesman declined to comment on the report, saying the company does not comment on speculation.