EMC stockholders will receive about $33.15 per share in cash and a type of stock that is linked to "a portion of EMC's economic interest" in its VMware business, which will remain an independent, publicly traded company, the companies said in a statement Monday.
Dell makes $67bn bet on EMC in tech history's largest acquisition
Largest-ever tech deal helps world’s third-largest computer maker to tap into faster-growing market for managing and storing data
American computer company Dell is buying digital storage giant EMC for $67bn in the largest tech acquisition in history and a move that marks another transformation for the once pre-eminent maker of consumer PCs.
Shares of EMC surged on news of the deal.
Dell, by contrast, is not publicly traded. Founder and CEO Michael Dell took the company private at a price of $25bn in 2013 largely to escape the clutches of investors who wanted to oust him (notable among them activist investor Carl Icahn).
EMC, a company with a large legacy business in packaging, selling and making software for computer storage systems.
It’s a core business that has been in decline as more companies move to cloud storage, and while EMC has invested in similar products related to the cloud, they have not managed to offset the declines in the company’s main business.
Glenn O’Donnell, vice-president research director for market analysts Forrester Research, said the move made long-term financial sense, though how it would be paid for in the short term was a larger question.
“They’ll be getting an absolutely enormous cash flow stream with EMC,” said O’Donnell.
“The core cash flow stream is declining but it’s still huge. That’s a really bad thing for a publicly traded company, but it’s a darn good thing for a private one.”
It also owns a majority stake in VMware, a widely used “virtualization” cloud computing company that is has its own tracking stock (EMC sold 15% of VMware as an IPO in 2007) and a market cap of some $33bn by itself.
O’Donnell said that while VMware is the crown jewel in the acquisition, it might have to go. “They have to drum up some cash,” he said. “The investors are ponying up some money. I have to believe part of the plan is to spin off VMware, because that will net them a ton of money.”
“EMC’s board and I have worked tirelessly over the last few years exploring a variety of options for EMC, and I truly believe this is the best way forward for us,” said Joe Tucci, chairman and CEO of EMC. The combined company, he told investors on a conference call on Monday, would have hubs in Boston, Massachusetts; Austin, Texas; and the San Francisco Bay area.
