Dell Inc. revealed that it has received U.S.A regulatory clearance to proceed with its planned $67 billion purchase of data storage company EMC Corp. Round Rock, Texas-based Dell Inc. has passed a mandated waiting period under antitrust laws that are intended to allow the U.S. Federal Trade Commission time to review the purchase. If no FTC action is taken, the purchase can proceed.
But the Dell Inc. deal still has to receive regulatory approvals from other jurisdictions and from EMC shareholders. “We are delighted that, with this key regulatory milestone now complete, we have taken another step on our path to becoming a combined company,” Michael Dell, chairman and CEO of Dell Inc., said in a written statement. “Our teams are engaged in integration planning and all transaction-related workstreams are on track.” Dell’s planned $67 billion deal for EMC, which is based in Hopkinton, Mass., a suburb of Boston, was announced in October.It would be the biggest IT sector buyout ever.
This deal is so big that some analysts have questioned whether Dell Inc. has the funds to pull it off, and EMC’s stock price has dropped since the deal was announced. Meanwhile, Dell Inc. and EMC executives keep reassuring investors, customers and employees that the deal is definitely happening. Rory Read, Dell Inc.s’ chief integration officer, wrote a letter last week to Dell Inc. employees updating them on the EMC purchase. Read wrote that the debt financing was “fully committed” and being underwritten by many leading global banks. Read said they were on track to close the deal in the May to October timeframe and expected a shareholder vote in the spring. However, the New York Post recently reported that Dell Inc. was having a hard time finding takers for the loans it needs to take out to pay for the deal, with a JP Morgan-led group of banks needing 10 more days to raise the first $10 billion for the deal.
Japan-based NTT Data Corp. is in negotiations with Dell Inc. to acquire Perot Systems, which provides IT services to hospitals and governments. A sale of Perot Systems could help pay for the EMC deal and Reuters reports that Dell Inc. wants more than $5 billion for Perot Systems. Dell Inc. has not officially confirmed this,though it is exploring an IPO for its cybersecurity unit SecureWorks.