DELL to takeover EMC for $67 Billion
DELL Inc. recently announced that it has decided to takeover EMC Data Corporation, the world’s biggest data storage company for a whopping $67 billion in a cash and stock deal. This deal will help DELL to exploit EMC’s line of data-storage hardware as well as data-center software from VMware Inc. This would be the biggest deal in history between two technology companies. DELL, once the industry’s leading PC maker is looking forward to expand its reach to other lucrative businesses and has identified data storage as a key growth area.
Industry pundits are predicting that this deal would take time as there would be plenty of roadblocks. “Integrations like this are extremely distracting and confusing and can take a lot of time,” said Steve Herrod, VMware’s former chief technology officer and managing director with the investment firm, General Catalyst Partners.
The funding for the deal would come from new common equity from Mr. Dell, private-equity firm Silver Lake and others and EMC’s cash on hand. A new tracking stock linked to VMware shares will also be created. According to people familiar with that matter, Dell will also likely need to absorb more than $40 billion in debt financing to help pay for the purchase.
Michael Dell, founder and CEO of DELL Inc. said “Our new company will be exceptionally well-positioned for growth in the most strategic areas of next-generation IT”. EMC boss Joe Tucci said: “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”. Mr Dell will be the chairman and CEO of the new company once the deal goes through. The deal is likely to close between May and October 2016.