Biggest tech & Big Data takeover ever: Dell acquires EMC for a staggering $67b
It’s official: Dell, Inc. has announced a formal takeover offer for rival cloud computing company EMC Corp.
The deal has been described by Bloomberg Business as the largest technology acquisition ever, with a deal that values EMC at a staggering $67 billion.
The deal is split into Dell paying $24.05 a share in cash, plus tracking stock for the 80 percent EMC owns in VMware Inc., with an additional $9 for each EMC share (minus VMware), for a total equivalent share price of $33.15, 28 percent above EMC’s closing level on October 7.
Reports that EMC will be subject to a takeover by Dell first became public October 8, although this isn’t the first time both companies have considered a deal with unsuccessful talks having previously occurred in September 2014.
EMC has faced a number of challenges in recent years, such as severely restricted growth including having reported declining profits in July, with its storage division reporting no growth at all; overall EMC grew only two percent between 2013 and 2014, compared to 16 percent between 2010 and 2011.
The tie-up with Dell will naturally provide cross-marketing opportunities across both companies’ product range, particularly at a time post Dell going private in 2013 where the computing giant has swung away from its traditional consumer business base towards catering to the ever growing cloud computing market.
“We’re continuing to evolve the company into the most relevant areas where I.T. is moving,” Chief Executive Officer Michael Dell told The New York Times. “This deal just accelerates that.”
That means that EMC can shop around between now and when the takeover offer is finalized, presuming it obtains shareholder approval and overcomes any regulatory hurdles; in the event EMC find a superior suitor, Dell would have the option of offering more for EMC or walking away from the offer with a discounted breakup fee.
However, the go-shop provision may be moot, as it would appear that EMC’s board has approved the merger agreement and intends to recommend that the company’s stockholders approve the deal.
Of interest given the conjecture leading up to the deal, Dell has obtained financing for the acquisition through a combination of new equity from Michael Dell, MSD Partners, Silver Lake and Singapore’s Temasek Holdings, along the issuance of new trading stock, new debt and cash on hand.
A date for the potential finalization for the deal was not given.
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