Dell confirms $67bn takeover of storage giant EMC

Dell has confirmed its takeover of storage firm EMC after a week of speculation over the move. VMware, which EMC has a valuable stake in, will remain a publicly-traded company after the deal.

Under the terms of the agreement, EMC shareholders will receive $24.05 per share in cash, in addition to “tracking stock” linked to a portion of EMC’s stake in VMware. The total value of the transaction could therefore reach around $67 billion, said Dell and EMC.

Dell became a private company in 2013, and is looking to boost its revenues as the traditional PC market remains stagnant. Dell is a leading player in the SME and mid-size company markets, and by acquiring EMC it will be able to tap into the large enterprise market in a big way.

“The combination of Dell and EMC creates an enterprise solutions powerhouse bringing our customers industry leading innovation across their entire technology environment. 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 centres, converged infrastructure, hybrid cloud, mobile and security,” said Michael Dell.

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. I am incredibly excited to partner with the EMC, VMware, Pivotal, VCE, RSA and Virtustream teams, and am personally committed to the success of our new company, our customers and partners.”

Joe Tucci, chief executive officer of EMC, said: “I’m tremendously proud of everything we’ve built at EMC – from humble beginnings as a Boston-based start-up, to a global, world-class technology company with an unyielding dedication to our customers.

“But 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. I truly believe that the combination of EMC and Dell will prove to be a winning combination for our customers, employees, partners and shareholders.”

The transaction is expected to be financed through a combination of new common equity from Michael Dell, MSD Partners, Silver Lake and Temasek, the issuance of tracking stock, as well as new debt financing and cash on hand. Dell and the related stockholders will own around 70 percent of the company’s common equity, excluding the tracking stock, similar to their pre-transaction ownership.

Following completion of the transaction, Michael Dell will lead the combined company as chairman and chief executive officer. Tucci will leave once the transaction closes. Dell’s headquarters will remain in Round Rock, Texas, and the headquarters of the combined enterprise systems business will be located in Hopkinton, Mass.

The deal isn’t expected to be completed until between May and October 2016, reflecting the size of the takeover.