Dell to acquire EMC for around $93bn

Dell has agreed to acquire storage giant EMC in a massive deal worth around US$67 billion ($92.6 billion).

Under the agreement, Dell, along with owners Michael S Dell, MSD Partners and Silver Lake, will acquire EMC and fold it into the company. VMware will be retained as a separate publicly traded company.

The deal is worth US$24.05 per share, as well as tracking stock related to EMC’s stake in VMware. Based on share prices as of last week, the total value of the deal would be US$33.15 per EMC share, or a total of US$67 billion.

Dell plans to assume US$50 billion in debt to acquire EMC, taking its total debt burden to US$60 billion.

But the hefty purchase will give Dell a competitive position in servers, storage, virtualisation technology and PCs.

Michael Dell said the acquisition will also give the company a strong foothold in some of the industry’s fastest growing areas.

“Our new company will be exceptionally well positioned for growth in the most strategic areas of next-generation IT including digital transformation, software-defined data centre, converged infrastructure, hybrid cloud, mobile and security,” he said.

“Our investments in R&D and innovation along with our privately controlled structure will give us unmatched scale, strength and flexibility, deepening our relationships with customers of all sizes.”

Despite the large debt burden, Dell expects the transaction to have a neutral to positive effect on its current corporate credit ratings.

The deal is subject to regulatory and shareholder approvals, and is expected to close sometime between the months of May and October of next year.

If the deal goes through, Dell is expected to become the largest privately held converged IT vendor in the world and the third-largest IT vendor behind IBM and Microsoft.

But analysts have noted that a converged Dell–EMC would still be lacking behind its peers in terms of its cloud computing portfolio, one of the current key IT growth areas.

Image courtesy of Robert under CC